In Singapore, every major bank — from DBS and UOB to OCBC, Citibank and Standard Chartered — offers some kind of reward or point programme. From cashback and air miles to exclusive dining deals, it might feel like you’re getting free perks for just using your card. But here’s the reality: banks aren’t doing this out of kindness. These rewards are part of a larger business strategy to build loyalty, encourage high-volume spending, and create long-term profitability. This article explores what these rewards actually offer, why they make financial sense for banks, and how you, the customer, are often the one funding these perks — even without realising it.
Common types of bank rewards in Singapore
Bank rewards in Singapore typically fall under four major categories: cashback, reward points, air miles, and partner perks. Each bank structures its programme differently, but the core idea is the same — you earn something when you spend, especially using credit cards. DBS’s “DBS Points”, UOB’s “UNI$”, and OCBC’s “90°N Rewards” are a few examples. The more you spend, the more you collect. These points can be exchanged for vouchers, gadgets, travel, or used to offset bills.
Types of rewards you’ll find
Air miles that convert to KrisFlyer or Asia Miles
Cashback on selected spending categories (e.g. dining, groceries, petrol)
Vouchers for retail, dining, or online platforms
Exclusive access to events, airport lounges, hotel perks
Discounts via merchant partnerships (e.g. Shopee, Grab, CapitaStar)
While this feels like a win for consumers, these rewards are a calculated tool. Banks benefit when you use their cards more often, especially if you don’t repay in full, triggering interest charges.
Why banks in Singapore give away rewards
In a highly competitive financial market like Singapore, customer loyalty is everything. Banks give rewards to stay relevant, attract high-spending clients, and reduce churn. These programmes may look generous, but they’re engineered for long-term gains — not charity.
Strategic objectives behind the rewards
Drive higher monthly card usage
Encourage customers to consolidate all spend on one card
Boost bank’s earnings via merchant transaction fees
Increase chances of revolving credit (interest income)
Build cross-selling opportunities across loans, insurance, and investments
Rewards as behavioural psychology
When users anticipate rewards, they tend to spend more freely. This behavioural nudge helps banks earn both direct fees and valuable data on your habits. The better they understand you, the more precisely they can sell you new financial products — all while keeping you loyal through seemingly “free” rewards.
Where the money really comes from
Bank rewards are not a gift — they’re a reinvestment of income that banks already collect. The cost of your rewards is quietly embedded in transaction fees, interest payments, and breakage (when unused points expire). In short: you’re funding your own freebies.
Revenue streams funding rewards
Merchant fees every time you tap, swipe or scan
Interest from cardholders who don’t pay in full
Interchange fees on foreign transactions
Breakage — when points expire or go unused
Bulk deals with retailers and travel companies to offer discounted redemptions
Real value vs perceived value
A reward may seem valuable (e.g. $50 voucher), but the real cost to the bank might be $15 thanks to volume deals. Plus, many redemption catalogues inflate the number of points needed for redemptions. Always calculate: how much did you have to spend to get this “free” item?
Ultimately, smart users can benefit from rewards — but only if they pay balances in full and don’t overspend just to chase points.
