You should IMO always do this when putting your work on a shared branch

No. You should never squash as a rule unless your entire team can't be bothered to use git correctly and in that case it's a workaround for that problem, not a generally good policy.

Automatic squashes make it impossible to split commit into logical units of work. It reduces every feature branch into a single commit which is quite stupid.
If you ever needed to look at a list of feature branch changes with one feature branch per line for some reason, the correct tool to use is a first-parent log. In a proper git history, that will show you all the merge commits on the main branch; one per feature branch; as if you had squashed.

Rebase "merges" are similarly stupid: You lose the entire notion of what happened together as a unit of work; what was part of the same feature branch and what wasn't. Merge commits denote the end of a feature branch and together with the merge base you can always determine what was committed as part of which feature branch.