8 ways to save in this season of spending

Prudence, planning before shopping can save you from a shock when credit card bill arrives

The festive season is upon us and it is all too easy to get carried away with the spirit of giving to the point where we can endanger our financial goals.

But by exercising some prudence and having a plan before you start your Christmas shopping, you can save yourself from an unpleasant shock when the credit card bills land in the new year.

The Sunday Times highlights eight budgeting tips for your year-end holiday spending.

1. Making a list and checking it twice

Having a list lets you monitor if you are keeping within your budget.

Mr Desmond Tan, head of group lifestyle financing at OCBC Bank, says it is prudent to draw up a budget as well as a list of loved ones and friends whom you are shopping for.

"This will allow you to work within your budget and have a rough gauge of how much can be spent on each person. This also helps you to avoid getting carried away with the season's promotions, which might lead to overspending," says Mr Tan.

One way of keeping a log of your holiday spending is to use budget apps like Wally and Mint, which can be downloaded on your mobile phone.

United Overseas Bank says that it is important to set aside a fixed budget for the festive season, stick to it, and pay your credit card bills in full.

2. Shopping for discounts and promotions

Once the list has been decided, look for stores with promotions.

And why wait to shop only in December? Get an early start and buy whenever there are discounts throughout the year, if the items you want have a long shelf life.

Besides store promotions, look out for credit card discounts and rebates as well.

Mr Tan advises that using the right credit card at the right store can earn a customer more points or rebates.

The same goes for peak season travels. Whether it is flights, accommodation or places of attraction, avoid paying the higher prices that come with last-minute bookings during peak seasons like Christmas and the New Year.

All it takes is a little more planning to save on these travel costs.

3. Using your reward points

UOB says that it is timely for customers to redeem reward points for gifts. "During the year, you would have earned reward points on your card spend. Make sure you look at your card's reward catalogue and see if there are any items that you can 'purchase' as gifts for your family and friends," says a spokesman. "For example, you can redeem rewards through UOB's UNI$ programme for as little as 600 points."

OCBC Bank says it has numerous credit card promotions that shoppers can enjoy this season.

4. Saving on overseas buys

If you are making an overseas purchase - whether while travelling or making a purchase online - you will sometimes get the option of paying in Singdollars or in the local currency. Where possible, always try to pay in the local currency. For example, if you are asked by a store based in the United States if you want to pay in US dollars or Singdollars, pick greenbacks. This is because the exchange rate used in such situations is set by the merchant and is usually not favourable.

Additional fees may be charged by the card networks as well, says Mr Anthony Seow, head of cards and unsecured loans at DBS Bank.

5. Looking for online deals

It does not take much effort and time to shop for online coupons and deals before the real shopping begins. The savings will go a long way to help you stretch your dollar and keep within your budget.

With the prevalence of online shopping deals, more people will be visiting websites instead of malls for Christmas gifts. Start early to ensure that your orders are delivered in time, says OCBC's Mr Tan.

6. Consolidating your spend for higher rewards

As you plan what you are going to buy, think about the rewards you want to earn and consolidate your spending to the card that rewards you the fastest.

For example, if you love to travel, putting your Christmas spending on your UOB PRVI Miles card will give you the fastest air miles earn rate in the market, says a UOB spokesman.

7. Reviewing your financial plan

The year-end period is a good time to review our financial goals and investment portfolios, and make necessary changes for the new year ahead.

Mr Thomas Tan, head of wealth advisory and specialists at OCBC, says it is timely to do some financial "housekeeping" as we step closer to the end of 2017.

"I would encourage investors to review their financial goals and make necessary adjustment as their circumstances may have changed over the course of the year.

"This year, both bond and equity markets have done well, but investors should not be complacent about the markets," he adds.

"A regular review of their investment portfolios is, therefore, crucial to help position their portfolios for the new year."

8. Saving on personal income tax

With a few weeks to go before the end of the year, if you are keen to make top-ups to your Supplementary Retirement Scheme (SRS) and Central Provident Fund, do so before Dec 31.

SRS is a voluntary savings programme to encourage consumers to save for retirement while enjoying tax savings, as every dollar contributed to the account reduces your taxable income by the amount contributed.

These are two avenues you can use to save towards your golden years and enjoy tax relief at the same time. However, do bear in mind that there will be a new $80,000-per-year cap on the total amount of personal income tax relief an individual can claim, from year of assessment 2018.

Ms P'ing Lim, head of deposits and secured lending at DBS, says: "If you have disposable income and wish to grow your retirement savings, it is highly recommended that you start an SRS account.

"With SRS, you can enjoy tax relief - every dollar deposited into your SRS account reduces your taxable income by a dollar, up to a contribution cap of $15,300 for Singapore citizens and permanent residents, and $35,700 for foreigners."

OCBC's Mr Thomas Tan adds that people who have not contributed to their SRS accounts or topped up their CPF accounts may want to do so now. The benefits of SRS include the flexibility to invest funds in financial products, such as shares, bonds, unit trusts and fixed deposits, to earn higher returns. OCBC customers can contribute to their SRS account via fund transfers from any of their current or savings accounts. They can open an SRS account online or visit a branch.

Ms Lim adds that the earlier you set aside funds in your SRS accounts, the sooner you can channel this money towards investment and insurance products that can help you generate non-taxable returns. "As there is an annual contribution cap, we would recommend that individuals assess their liquidity needs and put as much as they can afford to, in order to maximise the savings on their taxable income," she says. There is usually a spike in SRS contributions before the Dec 31 deadline.

Customers can also look out for bank promotions during this period. For more details, visit www.dbs.com.sg/srspromo

Another avenue to enjoy tax reliefs is via a CPF cash top-up, capped at $14,000 (maximum $7,000 for self, and maximum $7,000 for family members).


Spending spike in November and December

The end of the year is always a busy time as we prepare for the holiday season, so it is no surprise the three local banks have seen an uptick in consumer spending.

Mr Anthony Seow, head of cards and unsecured loans at DBS Bank, tells The Sunday Times that it generally sees card spending increase significantly in November and December compared with average outlay in earlier months.

"Monthly sales during the (year-end) holiday season are, on average, 20 per cent higher compared with monthly sales during the January to October period," he says.

"In addition, spend in foreign currencies (from travel or online purchases from overseas sites) tends to increase at an even higher rate, and the proportion of our customer's spend on foreign currencies goes up as a result."

Mr Desmond Tan, OCBC Bank's head of group lifestyle financing, anticipates a double-digit percentage increase in credit card spending for the festive season compared with last year, especially on dining at hotels and beauty-related gifts.

He attributes the increase to the promotions and offerings provided by OCBC's partners.

"Some exclusive offers, such as the OCBC card member deals offered at Robinson's signature Black Friday event, which saw a tremendous response... incentivised customers to spend on friends and family," he says.

"This year's positive economic growth sentiments and the end-of-year festive mood have all played a significant role in the upward spending trend."

United Overseas Bank says its card members typically spend more in November and December.

Last year, total retail spending rose 40 per cent while travel outlay increased 15 per cent and dining was up 13 per cent.

"We expect this trend to repeat in 2017, especially as consumers look to stretch their holiday dollar by taking advantage of dining deals and shopping and travel bargains," says a UOB spokesman.

He adds: "Online spending increased more than 20 per cent in the first 10 months of this year.

"We are also seeing more customers take advantage of deals and discounts arising from year-end online retail campaigns, such as Singles Day, Black Friday and the upcoming 12.12 Shopping Day."


Bank promotions

DBS Bank

Supplementary Retirement Scheme:

Receive a $50 cash gift when you top up $15,300 into your SRS online before Dec 31.

And receive additional $200 cash for every Manulife RetireReady insurance plan bought using SRS. This is a retirement income plan that offers a guaranteed monthly income, flexibility and two times the guaranteed monthly income should you be unable to perform at least three out of six activities of daily living, such as washing, dressing and feeding.

There is also a discounted sales charge if you use SRS to invest in unit trusts.

DBS Multi-Currency Account/DBS Visa Debit: If you spend a total of $1,500 in foreign currencies on your DBS Visa Debit Card until Dec 31, you get a cashback of $50.

Visit https://www.dbs.com.sg/personal/promotion/visa-debit-cashback

DBS Christmas spend and redeem promotion: Every $100 spent on DBS/POSB cards lets you redeem sure-win gifts plus a chance to scoop $50,000 on the DBS Lifestyle app.

POSB Everyday Card holiday promotions: Enjoy up to 5 per cent cash rebate when you register and spend overseas with the POSB Everyday Card until Dec 31. There are also festive offers from DBS partners such as Watsons, SPC and Sheng Siong. More details at posb.com.sg/everydaydeals

OCBC Bank

Customers can get $50 worth of shopping vouchers if they are among the first 2,000 customers to open a new OCBC SRS Account by Dec 31 and deposit $15,000 within seven days of the account opening.

Christmas shopping: Customers can enjoy up to 20 per cent off their Christmas shopping, 50 per cent off Christmas dining and 10 per cent off travel deals when they pay with their OCBC cards at OCBC exclusive partner merchants. These include Crabtree & Evelyn, Marks & Spencer, Hamleys and Singapore Airlines.

OCBC Mighty Savers 10th anniversary lucky draw promotion: Deposit a minimum of $300 in fresh funds into any of the qualifying accounts in the OCBC Mighty Savers Programme and stand a chance to win a $10,000 education endowment fund this month.

Travel insurance: Get 55 per cent off all Explorer Travel Insurance single-trip plans bought via OCBC online banking. You can also get 30 per cent off Explorer Travel Insurance annual plans bought via OCBC online banking and a $120 SPH gift card to buy up to three digital magazine subscriptions.

FRANK credit card promotion: For those under 30, sign up for a Frank credit card and get a $50 cash rebate with any Visa spend within the first month of card approval. Additionally, get a 10 per cent rebate on your mobile payment spending with a minimum outlay of $400 offline a month using Android Pay, Apple Pay or Samsung Pay.

United Overseas Bank SRS: Invest your SRS funds with UOB - via unit trusts and insurance - and receive complimentary dining at Singapore Marriott Tang Plaza Hotel.

UOB cards: UOB card members can redeem a limited-edition designer Fitbit Ionic watch or Fitbit Charge 2 tracker when they spend on their UOB cards. This is available until Dec 31.

Redemption is on a first-come-first-served basis and limited to one Fitbit Ionic watch or Fitbit Charge 2 tracker per customer, while stocks last.

A version of this article appeared in the print edition of The Sunday Times on December 03, 2017, with the headline 'Eight ways to save in this season of spending'. Print Edition | Subscribe