What Science Says About How You Can Use Credit Cards To Be Happier

Some people say you can’t buy happiness with money. But such a blanket statement rarely holds true without qualifications. In fact, in many situations, money can definitely get you a lot closer to happiness. Decades of research have shown that, while money in of itself does not cause happiness, how you spend money can indeed have positive effects on your psychology.

In Singapore, credit cards are widely accepted and are effectively equivalent to money. Not only that, credit cards can be even better than cash as they can often earn rewards for people in form of cash back or airline miles. If you’re already getting the best dollar value out of your credit card rewards, here are some research-backed ways you can squeeze more delight out of your next redemption. Sure you can’t redeem credit card rewards for happiness, but they can definitely get you a lot closer. It’s science.

Make Other People Happy

It is scientifically proven: giving is better than receiving. According to a study from Stanford, the most satisfying way of using money is to “invest in others.”. The term “invest” here is used as a general term to also encompass other actions like donating, gifting and sharing. The same study was featured on the Science journal to highlight spending money on others have more positive impact on happiness than spending on oneself.

To prove this concept, researchers gave participants either S$5 or S$20. Some were told to spend the money on themselves by 5pm that day; others were told to spend the money for someone else, including making a charitable donation. Regardless of the amount of money they received, people who spent for others reported more happiness than those who spent the money for themselves.

While we can’t all be as generous as Bill Gates or Warren Buffett, most of us can do things for people in our lives with our money. We could buy gifts, meals or drinks for our friends and family. We could donate small amounts (S$10-S$50) to a non-profit that needs more funding. It doesn’t have to be grand; most people appreciate simple pleasures in life!

Many cashback credit cards can really help you do this even more by earning you 5%-10% of cash rebate on your different expenditures. These savings can add up to meaningful amounts and increase your spending power. For instance, Citi SMRT credit card can help you save 15% on your coffee purchases, meaning you can get one free cup of coffee for every seven you buy. So next time you grab coffee with with a friend, say, “This one’s on me.” The same applies for credit cards that earn cashback on shopping or dining. Offer to buy a meal for a friend or your parents. Get a small gift for someone on special days. These can not only brighten up their days, you will definitely come out feeling better!

Book A Trip

The same set of studies also emphasise that buying experiences contributes more to your happiness than buying goods. If you think about it, it’s actually quite simple. No matter what we buy, we are wired to compare our possessions with others’, and someone always has something better. As time passes, material goods become obsolete, or we often forget what we buy. On the other hand, experiences are easy to appreciate and remember because they are deeply personal. We are the sum of our experiences, not our goods.

In a study in the Journal of Personality and Social Psychology, researchers asked participants to rate their happiness with their last experiential purchase over $100, and another group to rate their happiness with their last material purchase over $100. Overall, experiences got higher happiness marks than the material possessions.

And what’s better than a nice trip abroad in terms of creating lasting memories and having fulfilling learning experiences? If you have a travel credit card, using your credit card for an experience is easy: use your air miles to pay for a weekend getaway. With certain airlines, you might be able to stretch your rewards even further by snagging cheap award tickets.

While you’re organising your trip, see if your credit card comes with dining or experience perks at your destinations. Often, banks and credit card companies (i.e. Visa, MasterCard or American Express) offer discounts at fabulous restaurants and tickets to plays, amusement parks and shows.

Other Tips on Buying Happiness

It is true that being rich doesn’t necessarily make you a happy person. However, we do live in a materialistic world, and we often need money to do things that make us happy. In other words, money is an opportunity for happiness. It is an enabler. Too often, people squander this “opportunity” because they have misconceptions of what makes them happy. If you want more insights on this topic, below is a series of tips organised by some of the foremost researchers in the world on this topic.

1. Buy more experiences and fewer material goods
2. Use money to benefit others rather than yourself
3. Buy many small pleasures rather than fewer large ones
4. Eschew extended warranties and other forms of overpriced insurance
5. Delay consumption
6. Consider how peripheral features of their purchases may affect their day-to-day lives
7. Beware of comparison shopping
8. Pay close attention to the happiness of others