Credit cards 102: The extra perks and rewards (+ comparing Royal Skies miles redemption)

Now that you’ve been armed with a solid introduction into credit cards and know what their main purpose is (delayed payment), what happens if/when you pay off your bill partially or in full or not at all (potential interest and/or penalty fees), what the difference is between your statement date and your due date (…please see previous post…), how credit cards earn the banks loads and loads of money (they delude you into a false sense of comfort and encourage you to make minimum payments so they earn maximum interest), how you could lose loads and loads of money without really realizing it (getting deluded into a false sense of comfort where you make minimum payments and pay maximum interest), etc.

You also now know that all the banks in Brunei offer pretty much the same credit card rates and fees – 18% interest per annum (which is repackaged and advertised into the much more palatable and misleading “1.5% per month” rate), with an 8% minimum payment. Since Bruneians are preferential towards Islamic banking nowadays, Baiduri and Standard Chartered call the 18%  a “finance charge” and BIBD does an even more roundabout calculation involving Admin fees and ‘Ibra (discretionary rebate) but as a consumer all you need to know is whatever fancy name the bank calls it, you have to cough up 18% per annum if you’re not prompt with your bill.

diffsame
If I ever start up my own bank, I’ll call it a watermelon payment and link it to the average annual rainfall

With all that out of the way, the main message I urge you to understand is that banks want you to use your credit card because any single time you fail to clear your bill before the end of the month, it’s profitable for them. They’re not providing this service to you as a favour; they’re not being compassionate and kindhearted by allowing you to delay your payments. Banks are commercial, for-profit institutions; they’re a business and profitability lies at the very core of any business. So in order to boost profitability, banks will encourage you to use your credit card more. Even if you start off disciplined and responsible, with the knowledge that credit cards are mini-loans that don’t represent an extension of your spending ability, they want to tempt you down the slippery slope, to seduce you into replacing your cash transactions with credit in the hopes that one day you’ll get complacent, absent-minded, and careless and forget to pay your bill before it’s due. And every single time this happens, the bank earns a little bit of money. Unfortunately for us (and fortunately for the banks), this tends to happens a lot of the time because the subject of credit card debt has been stripped of its fine print and completely normalized.

forgetful

What I mean when I say that is: the idea of having debt and, specifically, the concept of having an unpaid, outstanding balance on your credit card which you push from month to month has been cloaked, veiled, and painted to look perfectly normal. There’s very little stigma and shame associated with this because we’ve created a society in Brunei (and well, most parts of the developed world) where debt, loans, and credit card balances are all viewed as a normal part of life: if you’re an adult, you probably have utang – and if you don’t, you probably should.

In Brunei, the euphamism (i.e. “nice word”) for having lots of debt is “oh, aku ada banyak commitment.” And the image this phrase inevitably plants in your mind is, ho boy this guy’s a solid bloke – he’s probably done the responsible adult thing and settled down; now he has a wife and child to pay for and you definitely need loans for that type of thing.

Yakan?

(Hint: No.)

Ok enough emotional blackmail for the time being; back to the banks!

ccapp

When you sign up for your credit card and fill out the little application form, the default option is either manual payment (i.e. the responsibility of payment is all on you and if you’re late by even a day, you’re slapped with a penalty) or direct debit of the minimum payment (i.e. 8% will automatically get transferred over from your general account). I signed up for a credit card three years ago, I was fresh off the student boat and only a month or two into work (if i brought my pet rabbit i bet they would’ve offered him one too); I vaguely recall 50% and 100% also being options, but they certainly were not the first check-boxes at the top of the list. Furthermore, y’know we live in a world of automatic e-mails, instant messaging, and cash deposits that immediately register in your accounts. But even at this technological frontier, credit card payments “will only be credited the next day” (!!) which bloody well means if your deadline is the 4th of July, and you pay on the 4th of July, you’ll still get slapped with a penalty because the payment will only kick in the next day -_-

Do you see how the banks want you to slip up? This isn’t a conspiracy theory, this is just smart business that bets on consumers being dumber than a box of rocks. And the banks are on the winning side of this bet, that’s what the real shame is. We need to stay educated, people! Read the fine print, take responsibility and ownership over your own matters, and stop blaming the banks and shops and government for yo’ brokeass self! Chances are you have no idea what real poverty and kesusahan feels like, you’re probably just mismanaging your funds. (Disclaimer: I don’t claim to know what real poverty feels like but well I ain’t blamin’ nobody for not having my million dollar mansion yet.)

(Except myself. Sigh.)

Anyway. Like I said, banks want to encourage you to use your credit cards more. Their motives for this should be pretty clear by now so let’s look a little deeper into how they go about doing this:

 I WILL GIVE YOU *ALL* THE REWARDS!!1!

They’ll reward you, of course! Tempt you with treats and “for a limited time only!!” deals in the form of rewards programs or discounts.

Credit card rewards programs generally operate around a simple premise: The more you spend on your credit card, the more you earn “rewards points”; and you can use your rewards points to redeem things like air miles, cashback, or donations to local charities. BIBD calls theirs Hadiah Points, HSBC and Standard Chartered calls them Reward points, Baiduri has the extremely long-winded “Bonus Points which are then converted to Baiduri $ which can then be transferred to an Instant Rewards Card“. Click on the links for more details on the respective banks’ site.

 

Credit card discounts are more straightforward. You’ll gain access to discounts or offers at participating stores and retailers if you make the payment with your credit card. For example, you get 20% off if you spend over $20 at Ximply Chriz and pay with your BIBD card.

It’s worth noting that these rewards programs and discounts are often also available with debit cards, but the discounts are usually higher and rewards better with credit cards. So for instance, the debut of FashionValet’s pop-up store at Empire last month was open exclusively to Standard Chartered credit card holders and invited guests only. (It was open to public after but the obvious perk is that Standard Chartered credit cardholders got first pick.)

Standard Chartered’s FashionValet perk

I explained in an earlier post that I quite enjoy having cards with more than one bank because it allows me to take advantage of more dining discounts, which is useful especially since I spend so much money on food and drink. Similarly, the rewards program is actually the main reason I charge expenses onto my credit card; I do this to accumulate rewards points which I then redeem for Royal Skies miles.

I’m not going to meticulously detail out and compare all of the perks across the banks because there’s such a huge variety; if you’re interested in more details I encourage you to click the links to the respective banks above. But in general, the credit card rewards programs allow you to redeem your points for:

  • annual card fee waivers (BIBD and SCB)
  • cashback (BIBD and essentially what the Baiduri Instant Rewards Card operates as)
  • Royal Skies miles (all banks)
  • Kris Flyer miles (not sure about this, you’ll have to check)
  • Charitable contributions (BIBD and SCB)

Since I’m mainly interested in the Royal Skies miles, here’s a comparison of their redemption programs across all the banks:

ccmiles

**Not gonna lie, Baiduri’s Instant Rewards Card system was too complicated and I couldn’t find the Royal Skies redemption details on the website so I gave up. Step up yo game, Baiduri!

I only have an HSBC credit (and debit) card and a BIBD debit card that doesn’t seem to earn Hadiah Points (perhaps it’s not automatic and I need to sign up for it? I’m not sure) and like I said above, I collect points on my HSBC credit card solely for the purpose of redeeming Royal Skies miles. According to the table, HSBC currently has the best/cheapest “dollar spent per mile” conversion rate, so yay!

Considering I pay off my credit card in full every month and have never made an interest payment, all the points I accumulate don’t cost me anything, and will also be converted into Royal Skies miles for free. I’ve redeemed “free” flight tickets on Royal Brunei at least twice in the last few years, which is pretty darn awesome. But do note that flight redemption doesn’t include airport tax and surcharges, so my “free” tickets cost me around $100-$150 each, if I recall correctly. Still, the usual price of tickets is in the $300+ range anyway so my “free miles” did give me a hefty discount.

Disclaimer: It helps that I travel for work sometimes (a couple of years ago this was very frequent) and I tend to operate on a “pay first, claim from office later” system. So I end up charging the hotel fees, etc. onto my credit card (which will earn me points) but I don’t actually end up “spending” anything because obviously the cost will eventually be fully reimbursed by my employer.

Nevertheless, with HSBC’s winding down process in full gear, I’ll eventually be scouting the other banks to decide where I should transfer my main accounts to (i.e. my general account for salary purposes and my credit card).

One way to make this decision is, of course, to take a look at the savings accounts and compare the rates on offer. Although it’s worth keeping in mind that you can easily open up a savings account in any bank without signing over your salary, so perhaps this is a secondary consideration. In fact, the decision on which bank to assign your salary to has the greatest bearing on where you’re able to obtain financing in the form of credit cards and loans. So a key consideration you should look into are credit card rates (if you’re interested in a credit card) and the associated discounts and reward programs. However, I don’t think you should ever base your decision solely on the rewards; these are just a supplementary bonus and shouldn’t inform your overall decision, especially since the deals rotate and change so frequently. I encourage you to look into financing options and loans also, especially if you foresee yourself needing a major loan (e.g. house, education) in the near future. I haven’t done a comparison on that but perhaps I will one day. And the final thing to think about is accessibility – where are the bank branches and are ATMs conveniently located near you, your workplace, and the areas you frequent?

There’s no real “best bank in Brunei”, despite all the annual awards and recognition the local banks like to tout and flaunt about. It really does depend on your own needs and preferences, and what will suit your own personal financial situation best.

Good luck!

It just crossed my mind to mention this final disclaimer: No, I don’t work for a bank, nor am I (or any of my direct family members) affiliated with any of the banks or financial institutions 😛 So my opinions are as objective as they can be and they’re made purely from a consumer’s standpoint based on my personal experience and the information I’ve managed to get from the banks websites.

 

 

 

Myn’s Deets: Mid-year expenses review 2016

Let’s start this round-up with a pie chart mapping out the distribution of my spending over the eight main Wally categories for the last six months:

janjune2016
For a detailed explanation and breakdown of my spending categories, click here.

If you’ve been around for a while, you’ll know that most of my money is spent on eating out – meals, coffees, desserts, etc. Shopping has surprisingly shot into second place, but really I think the best way to analyze and tease out this data is by comparing it to my expenses report from the same period last year.

So here are some observations from Jan – June 2016 versus Jan – June 2015:

  • I spent $200 more on Food and Drink this year. Surprisingly my coffee consumption has been exactly the same; I actually spent $4 less this year compared to the same period last year. I can (and probably should) actively work towards trimming this expense more (because I literally spend more on coffee than I do on my car and phone bill combined – how crazy is that?!), but at least the habit isn’t getting worse. Disclaimer: My car is fully paid off so I only spend on fuel and regular maintenance twice a year. And the fuel that goes into my car is a heck of a lot cheaper than the fuel I pour down my throat and into my veins. 
  • Household expenditures decreased by 20% even if I did spend $560 on a new aircon. Last year I had to spend quite a bit on vet bills because both my rabbits had to get neutered (they were humping me left and right and generally getting very aggressive and sexually frustrated, poor boys) and one of my guinea pigs kept getting sick until he eventually died in February at the ripe old age of 6 😦
  • My phone bill is exactly the same – $200 on two Easi recharge cards. Split over 6 months that’s approximately $33 but if you want to be really anal about it, I actually still have $33 unutilized phone credit left, which means I’ve actually only effectively used $167 this year (~$27 per month). At the end of Q1 I said I’d spent an average of $15 per month, but I’ve been using up my data plan faster lately which accounts for the increase.
  • I went a little nuts with the shopping, oops. I spent almost double on this category but that’s because last year most of my shopping was done in the second half of 2015 so I can still redeem myself before the end of the year as long as I slow down and take it easy. I had a few Asos sprees, bought some sports gear and a new pair of Nikes, and I had a couple of short hops to Singapore and KL (work) which is unavoidably when I’ll strut out of Uniqlo with more than a few bags in tow. Another reason this category has spiked is because I’ve sent a lot of kain to the tailor this year for baju raya (Eid clothing) which I intend to eventually use for work, especially since I chose to leave out the beads and bedazzles. Last year I’d only had two or three outfits made; this year I’ve already picked up and paid for four and I’m expecting two more next month.
  • I bought a flight ticket for my Big Annual Holiday (scheduled for November) and I had a quick weekend trip earlier this year too, which did contribute to some travel expenses under the Fun category.
  • Car costs dropped but that’s only because my regular servicing is a little overdue (I’m planning to get it sent next weekend); once the car’s serviced and paid for the amount spent will be pretty much the same across both periods. Fuel costs have been roughly the same.
  • Miscellaneous (yellow gift box) category has dropped. Maybe I’m stingier, haha. Well, to be honest I’ve tried to be more careful with this category; just because it’s nice to be generous and blanja makan doesn’t mean you should do it all the time without sparing a thought for your overall financial health. Don’t bekira but it’s also important to realize it’s not just about how much you spend on other people; it’s the thought and intention behind it that counts, right? Gift giving isn’t simply about spending money.

Overall though, my spending has increased by 3% which… I’m going to consider not too bad. My target to meet by the end of the year is actually to spend less overall than I did last year. It might be a little challenging, because:

  • Hari Raya (Eid) is coming up next month (duit raya, general Eid expenses, two more baju raya to pay for)
  • I have a 9 day holiday in November. Well the flight ticket is settled, but everything else still has to be booked and paid for.
  • I’m expecting to spend more than usual on my car soon to overhaul and replace a few things. These aren’t unexpected or unplanned expenses though, I’ve been keeping it in mind for a while and I think I’ll get it done in the coming months.

But on the bright side, last year:

  • I had a three week holiday in Europe which was pretty expensive so I’m hoping this years holiday will cost less
  • I bought a table which cost a few hundred dollars haha
  • I wasn’t very careful with my Miscellaneous category, which ultimately racked itself up to 16% of my overall expenses in 2015 (which is quite a lot actually considering I’d only spent 10% on shopping!)

The main areas I really want to focus on trimming down before they get out of hand are:

  • COFFEE. If I spend more on coffee than I do on my regular car expenses and phone combined, that’s pretty ridiculous.
  • Eating out (and take-outs) in general. I definitely spend in this category quite carelessly because I order/buy without thinking most of the time. The number one reason I want to crack down on this category isn’t because I really “need” to save the money for something else, it’s about reducing wastage. Food wastage is such a big deal but it doesn’t get talked about often enough. We throw away so much edible food as a society – sometimes the food is even untouched – and it’s really, really horrible. I’m certainly guilty of just mindlessly buying food I don’t really want (Parkinson’s Law: “Oh okay I’m having a coffee, I might as well also order a slice of $5 cake since I’m already here even if I know I won’t finish it”). Ramadan is a truly sad testament to just how wasteful we can be; I don’t even want to think about what happens to all that uneaten food at the end of a Ramadan buffet, or what the vendors at the gerai do with all the food they haven’t managed to sell. In general though, food wastage is such a tragic reality and it breaks my heart to know people don’t even think twice about tossing food out, especially if it was cheap! Eh, apa jua $2 – buang tia saja. Bali lagi nanti bah. It’s not about how much the food costs, it’s about not even blinking an eye when throwing away perfectly good, edible food.

So how do I intend to do this?

Well, you may be surprised to hear but I’ve never had a proper categorical (purpose) budget for myself. Every month I grant myself a lump sum budget after I’ve set aside my savings and usually I’m quite good at sticking to it – but I’ve never broken this budget down according to separate purposes, or down to individual weeks. I use Wally to track my expenses and I do check the “Review” tab every so often to track my progress over the month (so I can see if certain expenses are getting out of hand) but that only helps me see the damage I’ve already done so I’m able to make a mental note to be more careful in the future.

For starters, I’m going to try my very best to stick to a $100 per week food & drink budget which will include all my eating out, take-out, and yes, coffee expenses. And, hey, it’s Monday tomorrow so that’s a great time to start. $100 a week might sound like a huge amount to some people but like I always say, personal finance is personal, and it’s important to set budgets and targets for yourself that are realistic (and realistically I can spend >$100 per week if I’m frivolous). Trimming down habits has to start small and be reasonable so you don’t just give up and quit after three days because the targets you’ve set for yourself are impossible. Crash diets and last-minute marathons don’t work for people who are trying to lose weight. That’s why it’s important for me to track my expenses and progress; I can only set realistic targets for myself if I know what the reality is. Far too often, we don’t actually know how much we spend or save; we just guess and assume a reality in our minds which may be far from the truth.

How much do you spend every month?

I don’t really know, but not that much.

Are you sure?

You owe it to yourself to make sure.
Please don’t lie to yourself or make excuses for yourself, because the only person you’ll end up hurting is you. don’t care how much you earn or spend – it’s none of my business and it doesn’t affect me in any way at all.

It’s the same with anything else in life, really: if you feel like you need to shed a few kilos or start working out for health reasons, excuses about how you don’t have time, you’re too tired after work, you don’t know how to run/gym/swim, etc…. You’re only cheating yourself, you know.

Haha and by the way, I’m talking to myself as much as I am to you because I don’t work out as often as I should either. But I have been much, much better this year (since I made it a solid New Year’s Resolutioncompared to before when I literally didn’t do anything fitness related. Baby steps, we’ll all get there as long as we keep moving forward 🙂

/end motivational speech

And to make myself feel a little more accountable, I will be posting an update on my progress every Sunday (gasp the horror). Since that’ll be quite a short post on it’s own, I’ll attempt to slip in some general updates and casual blog-type chat. I’ve noticed that I’ve been doing more bloggy posts lately anyway in addition to my really long textbook-for-dummies type notes, so I’ve created a new category which we’ll call Myn’s Memos (cos I’m a sucker for really lame, uncatchy titles).

Enjoy what’s left of the weekend!

 

A word on round-ups, reviews & Ramadhan

Hello! We’re fast approaching the end of June, the end of the second quarter of the year, and we’re two-thirds through the month of Ramadhan (sadface), so I guess it’s mid-year performance season! I did a Q1 Expenses Round-up at the end of March, where I crunched my Wally data for the first three months of 2016 and pulled out some general trends and observations (like my average monthly spend over the various categories, and how Q1 2016 compared to Q1 2015 when I had first started tracking). So I’ll be issuing a Q2 update very soon, and I also intend to look at how this first half of the year (H1) compares to the first half of 2015. Have I spent more between January and June of this year compared to last year? Am I spending more on eating out and coffee, or have I reeled in that habit a little bit? Is my lifestyle inflating to exorbitant levels? Or has my spending kind of stayed the same?

Before we get to that, I just want to say I truly hope you’re having a wonderful and blessed Ramadhan. Even if you’re not a celebrant, I hope you’re having a great month nonetheless! While I’m not a big believer in New Year’s Resolutions per se (because I think we should consistently aim to better ourselves without having to wait for January 1st to roll around), it’s halfway through the year and I hope you’re still working on whatever goals you may have laid out for yourself at the start. (Cue cliched lamentation: how is it already almost July, where does all the time go?!?) 

If you’re not doing so well, or you didn’t manage to lay out any goals for yourself on New Year’s, July 1st (or 2nd if you want to get technical) is the exact midway point in the year – which will be just as convenient as a reset button, so there’s still time to start fresh if you need to 🙂

For those who follow the Islamic calendar, Ramadan is often seen as the ultimate reset. I had said in a previous post that Ramadan is always a quieter, more mindful time and that’s because it’s the one month of the year where Muslims are encouraged to shift their focus away from their worldly, material lifestyles (burning hours on the daily at the 9-to-5 grind, chasing paper and indulging in insatiable hedonistic wants and pleasures) and instead, are asked to turn inwards in contemplation and reflection.

This is the time of the year where we should induce an existential crisis and ask ourselves: What is the point of all this? Am I living a life that makes me happy? Where am I going? What do I want, and how do I get there? At the root of it, Ramadan is about consciously pushing aside the noise and distraction in order to refocus our lives and re-calibrate to make sure we’re not losing ourselves in the materialistic maelstrom.

Deliberately fasting between sunrise and sunset allows us to feel the very basic human condition of hunger and deprivation, which is often not something we allow ourselves to feel in our middle-class lives of abundance (and wastage). It reminds us of our vulnerabilities – how easy it is to feel deprived, how easy it is to feel hunger and suffering; it reminds us to be grateful for what we have, and it reminds us that millions of people across the world exist every day without the same comforts and privileges that we are fortunate enough to receive. Deliberately depriving ourselves – even if it’s only for half a day – should be a rude awakening: we’re not better, stronger, smarter; we’re human and we’re just as susceptible to the harsh realities of life and poverty as anyone else. It’s literally as simple as taking away our breakfasts, our coffees, and our lunches; that’s all that separates us from our concept of “them”. Take away our paychecks and our ability to provide ourselves with limitless comfort; the chasm that separates “us” from the “deprived” is not a canyon – it’s a crack.

A month spent in quiet prayer allows us to be more alone. They’re called mass prayers only because crowds flock to the mosque to assemble in neat rows and pray in unison. Nevertheless, each and every person conducts their own prayer alone throughout; you don’t talk to the people next to you, you don’t discuss, you don’t even make eye contact until the prayers are done. And the time spent alone (but surrounded by others) is a strangely comforting feeling; you may be on your own but everyone else is on their own with you too. On a day to day basis, we often forget to prioritize spending time with ourselves; we’re too busy getting distracted by our buzzing smartphones; always running errands, things to do, people to see, putting out one fire, and then the next, until you’ve collapsed unconscious in bed.

And ultimately, Ramadan encourages charity. And by charity, I don’t only mean the narrow definition of giving food or money to the less fortunate. I mean charity in the form of kindness and respect. Fasting is also about holding in your anger and making the conscious decision to be more patient, more compassionate, more understanding. Hold your tongue and avoid gossip. Try not to be judgmental. And at the end of it, be charitable towards yourself too. Be kind to yourself, spend time with yourself in prayer and reflection, and owe it to yourself to always try to be a better version of who you were yesterday.

We’ve got less than two weeks till the end of Ramadan, and a week before the midpoint of 2016 – all the best for your own (personal) mid-year performance review 🙂

(And I will catch up with you on my personal finance review very soon!)