Whilst I will focus entirely on GrabPay in this post, it’s worth calling out that there are other useful payment apps /or extensions – i.e. FavePay and GPMC (abbreviation for GrabPay Mastercard) that I suspect not many are utilizing them to the fullest; but I’ll save it for another day.
Let’s talk about GrabPay.
By design, it is relatively easy to use. You can top up your GrabPay wallet using any credit card of your liking, and use the existing credits in the Grab wallet to pay for stuff (i.e. merchants who accept GrabPay as a mode of payment). Now, in the majority of cases, I don’t see why you would choose to NOT use GrabPay if the option presents itself (simply because you can take advantage of double dipping).
Before you get lost, let me explain where and how you get 2 benefits for the price of 1.
Dip Benefit 1: You get miles from the credit card you use to top up GrabPay wallet
Dip Benefit 2: The moment you pay for a transaction using GrabPay, you get Grab Reward points (4 GrabReward points for every $1 spent).
In this exercise below, let’s assume you are a Grab Platinum user.
With sufficient Grab Reward points, you can redeem it for a variety of stuff within the Grab app. My choice of poison is usually the $5 Grab ride voucher (which you can redeem for 2500 Grab Rewards points). If we do the math, it tallies up to 0.8% cashback for every $1 you transact using GrabPay.
Note: If you have been a long time Grab user and have been using this feature, you would know that this reward used to be a lot better where Grab was more lenient (read: generous) in giving out more Grab Reward points. At the same time, they were kind enough to ask for lesser Reward points from you to redeem the vouchers but the days are over. I’ll save the nagging but if you like, you can read more here)
Anyway, let’s go back and wrap up dip benefit 1. The trick here is to maximize the miles you would get from the credit card for topping up GrabPay wallet. And the last I checked, Citi Rewards card is still the best option in the market, which gives you 10 Citi points for every dollar spent. When you log in to Citi website, you have an option to redeem the Citi points in exchange of miles for any of their preferred airline partners. Personally I like to fly with Singapore Airlines so I would go for the KrisFlyer program. You will need 25,000 Citi Rewards points to redeem 10,000 KrisFlyer miles. In other words, for every $1 you charge to Citi Rewards card, you get 4 KrisFlyer miles.
To the nerds, this is the exact calculation: To get 25000 Citi Rewards points, you need to spend $2500 (25000/10) $2500 spend will get you 10000 miles. $1 spend will get you 4 miles. Now, without going too much into details, the standard valuation of a mile is $0.02 here in Singapore. So every dollar you spent will give you $0.08 worth of miles.
So here comes the popcorn – if I were to sum up benefit 1 + benefit 2 in terms of cash value for every $1 spent, it would work out to be $0.08 + $0.008 (0.8% cashback for GrabPay) = $0.088 (8.8% cashback for every dollar spent).
Now there is a contentious part of the argument about this credit card cashback because you need to use the miles you have to redeem for the flight ticket. The miles value in itself will vary depending on the flight price (so for simplicity, I have set it as $0.02) but if you are lucky to snag one ticket redemption (usually at 30% discount) during SIA spontaneous escape, the value of your KrisFlyer mile will increase (since the price of the flight ticket remains the same).
Take some time to digest the above. Once you understand the concept, I hope you come to realize why credit cards that generates miles is almost always better than cashback credit cards (simply because there is cap to the latter).