A cashback rebate is the key perk credit card holders have in mind when they choose their plastic, according to a new survey.
The poll found that about 70 per cent of 739 respondents indicated rebates as an important benefit, followed by dining discounts (53 per cent), and shopping perks (51 per cent).
The respondents, aged between 21 and 39, owned an average of five credit cards each, with 64 per cent of them holding DBS plastic, followed by Citibank and OCBC, at 62 per cent each.
Around 30 per cent chose OCBC as their favourite card, and 22 per cent preferred Citibank.
Again, the cashback rebate rate was the main factor, with 44 per cent citing it as the reason for a particular card being favoured. Air miles came a distant second at 13 per cent.
"Retail banks like Citibank and OCBC recognised this shift in consumer behaviour and addressed their demands by upping the ante in cashback rates," said Mr Vinod Nair, founder and chief executive of personal finance portal MoneySmart.sg, which conducted the survey on Facebook last October.
Mr Nair added that banks "competed aggressively for market share" last year, particularly for cashback credit cards.
He noted that six of the 11 credit card issuers in Singapore have either introduced new cashback card products or revamped their benefits to be more competitive.
Mr Nair cited the Citi Dividend Card, which was revamped last year to offer an 8 per cent cashback for categories such as dining, groceries and petrol.
The success of OCBC's 365 Card, launched in 2014 and marketed through outdoor and online campaigns last year, was due in part to how "OCBC managed to create a card that gave an attractive 6 per cent cashback, the benefit that users want the most, on dining, the most frequent expenditure category", he added.
There are two main types of cashback credit cards on the market, tier-based and category-based.
Tier-based cards structure their benefits based on how much a customer spends regardless of category, while category-based cards give benefits based on spending in particular areas.
"The data seems to suggest that category-based cards, which OCBC and Citibank offer, are preferred over tier-based cards. This could also be because cashback rates tend to be higher for category-based cards," said Mr Nair.
The survey also found that 72 per cent of respondents researched online before applying for a credit card, and 47 per cent applied online for their last credit card.
This article was first published on April 3, 2016. Get a copy of The Straits Times or go to straitstimes.com for more stories.