Maximise your Credit Card Miles and Cashback Using Cardup Singe

Maximise your Credit Card Miles and Cashback Using Cardup

I thought I had a conclusion deciding between Cashback or Airmiles when using a credit card. However, the existence of CardUp might change the entire equation all together.

[If it matters, this is not a sponsored post.]
Maximise your Credit Card Miles and Cashback Using Cardup Mainpage

Maximise your Credit Card Miles and Cashback Using Cardup Mainpage

 

What is CardUp?

CardUp is a platform that enables payment and collection of big expenses using existing credit cards, in places where cards are not accepted today. Example of such expenses includes rent, income taxes, educational loan, insurance (usually points are not applicable for insurance) etc. CardUp allows you to use credit cards to pay for those bills.

One of my friends shared with me that he had to PayLah his landlord his monthly rental of $1000. Unfortunately, most landlords do not accept credit cards. $1000/month is a big expenditure and if he is able to use a credit card, he might be able to collect cashback or airmiles along the way.

 

How does CardUp work?

Basically, CardUp acts like a middleman. You pay CardUp via credit card, CardUp will pay your vendor/suppliers/landlord for you.

In doing so, you get to collect cashback or airmiles which will otherwise be lost if you make a normal bank transfer. CardUp is currently a plug and play system. Simply sign up for an account, enter the details of your preferred credit card/s and you can start to  make and schedule payments.

CardUp will take a processing fee of between 2.25% to 3.3% for that transaction. Typically, it will take around 3 business days for your recipient to get the money. However, if you need a next day transaction, an additional 0.3% fee applies.

Currently, CardUp is able to perform transaction for the following.

  1. Rental payments (to a landlord)
  2. Rental deposits (to a landlord)
  3. Condominium Maintenance Fees (to a MCST or property developer)
  4. Tuition/School fees (to Singapore based schools or education centres)
  5. Insurance Premiums
  6. Income Tax/Property Tax/Corporate Tax/GST/Stamp Duty
  7. Season Parking
  8. Car Loans
  9. Electricity
  10. Helper Salary
  11. Miscellaneous Payments
  12. Payroll
  13. Supplier invoices

I believe CardUp will expand their services in the years to come. I have bold a couple of expenses in bold because I believe those are the more general expenses that everyone will pay. We will be using it to illustrate whether it is worth it to use CardUp or not.

 

Is it worth it to use CardUp?

We have to set a few assumptions and context to see if it is worth it. In my previous article on whether you can afford cancer, a typical medium income in Singapore is $56,550. I will draw a few assumptions from this income.

Example #1: Eric (Single. Stays with parents. Pays some of the household bills)

Maximise your Credit Card Miles and Cashback Using Cardup Singe

Maximise your Credit Card Miles and Cashback Using Cardup Single

Eric is working as a marketing executive in a SME. His annual income is $60,000. His annual income tax is $1950 (we are assuming he do not have any other income nor reliefs). He lives with his parents in a 4 room HDB flat and is paying for the electric bills (Annual Electricity Bills: $1608. Source:Average monthly electricity bill of a 4-room HDB household). He pays around $9000 annually to an insurance company.

Total Annual Recurring Bills: $12,558 (or $1046.50/month)

Maximise your Credit Card Miles and Cashback Using Cardup UOB ONE CARD

Maximise your Credit Card Miles and Cashback Using Cardup UOB ONE CARD

As you can see in the above screenshot, Eric will have gotten a net saving of $130.

 

Maximise your Credit Card Miles and Cashback Using Cardup UOB PRVI MILES VISA CARD

Maximise your Credit Card Miles and Cashback Using Cardup UOB PRVI MILES VISA CARD

If Eric were to choose miles, he will have 17,178 Airmiles which he can use to change for an airticket once he have accumulated enough. (I’m putting $12,000 into income tax for simplified illustration purposes only)

 

Example #2: Joseph (Married with one child. Bought a house with wife. Pays some of the household bills)

Maximise your Credit Card Miles and Cashback Using Cardup Married

Maximise your Credit Card Miles and Cashback Using Cardup: Married

Joseph is working as a teacher. His annual income is $60,000. His annual income tax is $1950 (we are assuming he do not have any other income and excluding reliefs). He lives with his wife in a 4 room HDB flat and is paying for the electric bills (Annual Electricity Bills: $1608. Source:Average monthly electricity bill of a 4-room HDB household). He pays around $9000 annually to an insurance company. He also pays for his son’s childcare fees of $800/month (Annual: $9600). He also pays for the helper of $700/month (Annual: $8400).

Total Annual Recurring Bills: $30,558 (or $2546.50/month)

Maximise your Credit Card Miles and Cashback Using Cardup Cashback Example 2

Maximise your Credit Card Miles and Cashback Using Cardup Cashback Example 2

As you can see in the above screenshot, Jospeh will have gotten a net saving of $660.

 

Maximise your Credit Card Miles and Cashback Using Cardup Airmiles Example 2

Maximise your Credit Card Miles and Cashback Using Cardup Airmiles Example 2

If Joseph were to choose miles, he will have 42,945 Airmiles which he can use to change for a Business Class Airticket to Bali worth $1,154. His flight savings is $557. (I’m putting $30,000 into income tax for simplified illustration purposes only)

 

Conclusion

If the recurring bill amount is smaller, cashback might be the preferred option as you probably have to wait another full year to get enough airmiles to fly. However, if the recurring bill is larger, you might be slightly indifferent towards airmiles or cashbacks.

In whichever your preference, CardUp will help you collect cashback or airmiles which will otherwise be lost if you make a normal bank transfer.

Some last words of advice: CardUp dependent on the bank’s credit card benefits. Any change in the rules of credit card benefits / airmiles redemption will affect the calculation as of above. We are writing in the view of a personal finance perspective. We recognize there might be other cashflow benefits for businesses to use CardUp. The information is update on 12 Aug 2020.

 

 

 

No one will care about your money as much as you do.

In Wealth Management, it is important to Pay yourself first. Beware of scams. Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investment, I hope to nurture genuine relationships with all of my readers.

Check out my most popular blog post in 2020 so far: 5 mistakes people make using their CPF.

Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business Phew

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business?

In Wealth management, one of the major expenditure is on insurance policies to protect your downside. In the recent case for AXA, they are considering to sell of their Singapore’s business unit, this lead to some people questioning what will happen to their insurance policies when they sell away their business.

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business Worries

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business: Worries

 

Why do they want to sell away their business?

Before we explore what will happen to our insurance policies after the companies sell that business away, we need to explore why would they even want to sell that business unit away if it is profitable.

It could be any of the following reasons:

  • Business strategy has changed
  • Raise funds to divest for peripheral operations (This is AXA’s cited reason)
  • Concentrate on other business lines
  • Focusing on other geographical markets
  • Being offered a good price / Cashing out on business

The list goes on. Insurance companies also acts like normal businesses and they will probably consider the sale of that business unit when an opportunity arises.

 

Is this the first time it happened?

It happened various times in the past and I believe this will happen again in the future.

In 2003, John Hancock was bought over by Manulife.

in 2007, TM Life Asia was acquired and now known as Tokio Marine Life Insurance Singapore Ltd.

In 2010, UOB Life sold away their life insurance unit to Prudential.

In 2018, Zurich Life was bought over by Singapore Life.

Under going discussion since 2019, AVIVA is considering to sell it’s Singapore/Vietnam business unit.

Under going discussion in 2020, AXA is considering to sell Singapore’s business unit. (Special note: AXA mentioned they will not be selling their Singapore’s business unit in 28 Dec 2017)

You can see that there is a fair amount of transaction that took place in Singapore shores as well.

 

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business?

I think that’s the key to the topic today. I have contacted the Life Insurance Association of Singapore (LIA) to confirm above. This is their response. I will bold the information that is relevant to consumers.

All insurers are licensed and are regulated by the Monetary Authority of Singapore via the Insurance Act, and its subsidiary legislation, and regulations. Due to the long term nature of life insurance policies, there are provisions* in the Insurance Act which the licensed insurer has to comply with, in an event of a voluntary transfer of business or re-structure of business or business failure, to safeguard the interests of policyholders. Refer to *Part IIIAA on Transfer of Business and Shares, Restructuring of Licensed Insurer and Winding Up.

Business Transfer (Buy-Over)

Depending on the deal agreed between the two parties, the buying insurer will generally become responsible for all policies of the selling insurer. For the individual policyholder, his policy’s terms and benefits will be unchanged, and will continue to be honored by the buying insurer.

In short, suppose you hold a policy issued by Insurer A. Insurer A is sold to Insurer B, Insurer B will become your insurance company. Your policy, now under B, will be untouched and will be made good by B.

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business Phew

What Will Happen To My Insurance Policies If My Insurer Sells Away Their Business: Phew

 

Conclusion

Your policy will still be in-force and be taken care of the new insurer. The next question will then be who will be taking care of your insurance policy from then on?

 

No one will care about your money as much as you do.

In Wealth Management, it is important to Pay yourself first. Beware of scams. Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investment, I hope to nurture genuine relationships with all of my readers.

Check out my most popular blog post in 2020 so far: 5 mistakes people make using their CPF.

Please feel free to contact me on my  Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!

$30000 per month crazy rich asians

Is $30,000 Salary a Month Enough?

QNS: Is $30,000 Salary a month enough?

When I ask this question to my clients, the first response I get is: HOW I FIND SUCH A JOB??

Last Sunday, Straits Times published an article titled $30,000 salaries, yet in serious debt (it is an premium article). This started almost an outrage in the Wealth Management and Personal Finance community in Singapore. Most of the comments were related to where to find such a job and probably missed the point of personal finance. Let’s explore the reasons when $30,000 salary a month is not enough?

$30000 per month crazy rich asians

$30000 per month: Crazy Rich Asians: May not with $30,000

Reason #1: You spend more than $30,000 a month

Typically, as we grow in affluence, our purchasing power increase and we tend to spend more to.

Meet John. John is a hardworking young professional. His first salary was $3000/month and he had to live a simple lifestyle. Along the years, John got promoted for his outstanding working performance and ability to show results. His salary gradually increase to $15,000/month. John is now working harder at work and often end work late. He will take a cab home (he used to take the public transport) and order a good meal from a nearby restaurant (he used to cook) to reward himself for the hard work. When he sees something that likes during shopping, he will buy it immediately (he used to ponder if the item is essential)  because he feels that he can afford it and he don’t have much time to shop anyway. He buys his friends meals (he used to go dutch) because he feels he is doing well.

John wakes up one day and was shocked to find out that his bank account balance haven’t been increasing after his promotion and has decreased.

If you spend more than you earn, then you will be in deficit.

 

$30000 per month salary spending more than you make

$30000 per month salary: spending more than you make

 

Reason #2: You acquire more debts that you can handle.

Previously, I wrote about a Quick Ratio that we can use to evaluate whether the company is financially healthy.

“A company CANNOT go bankrupt if it doesn’t have debts” ~Chengkok

I can’t remember who said this before so I’m just going to quote myself until someone prove me wrong. (Haha). During the COVID19 season, we are seeing record number of companies going bankrupt and closing down. Examples are like JC Penny, Hertz and AMC just to name a few. If you look at their financial records, it would be just a matter of them that they will go under.

Similarly, for personal finance, if you take on too much debts than you can handle, your cashflow will be severely impacted.

 

Reason #2.1: Leverage

Reason 2.1 is a compounder for reason 2.

When I was 19 years old, I was scared stiff of the stock market. That was because I had a friend who lost over USD$50,000 in one night in his CFD trade. $50,000 is a huge sum to a 19 year old kid and it scared me silly.

Leverage works like this. You ONLY require a SMALL sum to get a BIGGER exposure. Most people who have limited capital are attracted to this because of the high returns. However, if the stock price goes south, you have to pay for the exposure too. A capital of $10,000 can easily give you an exposure of $200,000. However, if the stock price plunge, you could lose a significant portion of the $200,000 that you DO NOT EVEN HAVE and hence acquire the debts that you don’t want.

“Go big or go home. Typically in investing, people go home” ~Chengkok

$30000 per month salary leverage

$30000 per month salary: Leverage

 

Reason #3: Bad Habits

In The Straits Times article, bad habits or poor financial planning will cause your financial downfall no matter how much you earn. Data from the Monetary Authority of Singapore shows that

  • 34 home owners have asked to stop payment for their loan until December
  • 2100 people have problem paying education and renovation loans
  • 6200 have asked to convert high credit card debt into term loan on lower interest rates

The list goes on. Gambling is also one habit that might cause financial woes. We are often reminded by the National Council on Problem Gambling on not to gamble especially during the Chinese New Year.

 

Conclusion

Some questions that we can ask ourselves in our financial journey.

Income plays just one part in your Wealth Management journey. It is your habits, your mindset and the people that you hang around with that helps you reach the level of financial freedom you want.

 

No one will care about your money as much as you do.

In Wealth Management, it is important to Pay yourself first. Beware of scams. Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investment, I hope to nurture genuine relationships with all of my readers.

Check out my most popular blog post in 2020 so far: 5 mistakes people make using their CPF.

Please feel free to contact me on my Facebook Page or  Telegram Channel! Or subscribe to our newsletter now!

3 Lessons I Learnt From Critical Illness Survivors and Family Members Being Strong

3 Lessons I Learnt From Critical Illness Survivors and Family Members

In July 2020, I had to honor to interview Critical Illness Survivors and their Family Members. I interviewed a Daughter whose mom suffered from a stroke, a 2-time breast Cancer Survivor and also a Father who’s son had Leukemia (Blood Cancer). After the 3rd interview, I noticed a consistent trend that all 3 exhibit and how they manage the whole journey in their family planning or wealth management.

I want to thank Angie, Grace and also Sean for their selfless sharing so that more people can learn what they went through. We also pray that you won’t need to use this lessons in future.

Thank you.

 

Lesson #1: It starts of with pain

In my interview, I realised that it starts from with some unexplained pain at a particular body part. Most of the time, it was brushed aside or just thought that it was harmless pain. Very commonly, the person will feel more tired than usual.

Pain is an message to your body that something is wrong. Please do not ignore it.

3 Lessons I Learnt From Critical Illness Survivors and Family Members Pain

3 Lessons I Learnt From Critical Illness Survivors and Family Members: Pain

 

Lesson #2: Seek Support

This was the most important when it comes to recovery. The journey of critical illness could be confusing, overwhelming and devastating. The right support could ease the journey where every single step is already well planned out. The Children Cancer Foundation and the Breast Cancer Foundation specifically named in my interview for being very meticulous. These societies impacted their lives so much that they continue to donate or give back till today.

“Please don’t stay in a private ward” 

Even though your hospital entitlement might be a single bedder, staying in hospital with no other people to communicate with and journey together might give the feeling of being alone and that’s the last thing we want. Talk to people, listen to their journey, know that you are not alone.

Seek out your friends, family and GOD.

3 Lessons I Learnt From Critical Illness Survivors and Family Members Support

3 Lessons I Learnt From Critical Illness Survivors and Family Members Support

 

Lesson 3: Be Financial Prepared

Whether you are a parent or a child, a critical illness will rob your time off work and saving. Fortunately, my interviewees bought insurance to protect their livelihood, money and especially time so that their loved one can spend time to journey together with the patient. Grace’s husband was able to step away from work for half a year so that he can accompany Grace during her treatment. Sean was able to spend time with his son during treatment times as well.

The hospital bills will be scary. “It is easily more than $500K a year”.

Be financially prepared even before it happens.

3 Lessons I Learnt From Critical Illness Survivors and Family Members Bills Shock

3 Lessons I Learnt From Critical Illness Survivors and Family Members Bills Shock

 

Bonus Lesson #4: Keep yourself in good condition

As a caretaker, parents or child, keep yourself in good condition. You need to be in the best condition physically and mentally to bring your family out of this. If you want to blame and punish yourself for what has happened, punish yourself by keeping yourself in a good condition and take responsibility to bring your family out of this.

You need to appear strong in front of your child, your spouse or your parents so that you can give them the confidence that everything will be alright.

3 Lessons I Learnt From Critical Illness Survivors and Family Members Being Strong

3 Lessons I Learnt From Critical Illness Survivors and Family Members Being Strong

 

Conclusion

Don’t ignore pain, seek support and be financially prepared.

Thank you Angie, Grace and Sean for the inspiration for me to write this article. You can view the replay below.


No one will care about your money as much as you do.

In Wealth Management, it is important to Pay yourself first. Beware of scams. Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investment, I hope to nurture genuine relationships with all of my readers.

Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!

Cashback or Airmiles

Cashback or Airmiles: A Behavior Economics Analysis

The long debate between Cashback or Airmiles has been going on every since the existence of Airmiles. In Wealth Management, there are tons of literature whether Cashback or Airmiles which each camp strongly defending their point of view. I will be using a behavior economic lens to analysis this after being inspired by Pete who recently wrote an article on his decisions to choose between Cashback or Airmiles.

Will you choose “up to 2% of cashback” or “up to 4% of airmiles”?

Cashback or Airmiles

Cashback or Airmiles: I miss travelling

To answer the above question, I have to remodel the question so that we can use a behavior economic theory to answer it. These are the following assumptions that I will be taking.

Assumptions

  • I will assume that Pete receive the full 2% and 4% (noted there might be conditions to get up to the intended rates)
  • I will assume that Pete receive $200 and $400 (in monetary form)
  • The probability of using the cashback is 100% (you will definitely be able to use the money)
  • The probability of using the airmiles is xx% (airmiles might be devalued/you can’t fly/points expire etc)
  • The traveler is paying the airfare out of their own pocket. (Thank you Philip Walsh for your contribution)
  • I recognize that airmiles are a specific spend in the travel category but will be treating it as if it is equal to cash

 

Which will you choose? 100% of getting $200 or xx% of getting $400?

One common way to approach this problem is using the concept of expected returns. In this case, if there is a chance of getting more more an 50% of getting $400, it is logical sense to go for the latter option. However, emotionally we might not feel the same.

In my previous sharing on Self Care and Wealth Management, I wrote about emotions being part of our decision making process and it is the same in this case. The behavior economic concept that I would be sharing with you is the certainty effect.

 

The Certainty Effect

Behavior Economist Dr. Daniel Kahneman propose a concept called the Fourfold Pattern. 

Cashback or Airmiles Fourfold Pattern

Cashback or Airmiles Fourfold Pattern

While we are not going to go through all four patterns, the behavior pattern that I would illustrate today’s case is in the top left section. These are the choices.

Choice #1: 95% of winning $10,000
Choice #2: 100% of winning $9,000

Clearly, choice #1 is ideal because the expected payout is $9,500. However, most people will choose choice #2 because the emotion called fear of disappointment. They rather “lock in” the profits in a high probability scenario. In certainty, most people are risk adverse.

 

The Final Verdict

In a real life scenario, we are unable to set controls in our experiment but we can draw inference from the certainty effect.

Choice #1: 100% of $200
Choice #2: xx% of $400

I believe most people will choose choice #1 because they are motivated by the fear of disappointment. There are too many uncertainty such as airmiles depreciation, airtravel resumption and expiry of points with choice #2. That being said, airmiles are can only be used in a specific category while cash will.. be cash.

I recognise that there will be some that will continue to choose choice #2 and may be motivated by other behaviour emotions.

How about you? What choice will you make?

 

No one will care about your money as much as you do.

In Wealth Management, it is important to Pay yourself first. Beware of scams. Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investment, I hope to nurture genuine relationships with all of my readers.

Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!