Tag Archives: credit cards

Can you time your credit card sign up bonuses?

The Milelion is featured in an ST article today entitled “It pays to time your sign ups“. The article seeks to answer the age-old question- when is the best time to  sign up for a particular card?

And unfortunately, like every age-old question (Can I drive 55? Are we human, or are we dancer? Who let the dogs out?) , it’s difficult to give a definitive answer. Sometimes early adopters have it best, reaping in the initial bonuses and making hay while the sun shines (or rather, until the T&C change). Other times, it may pay to wait until the bank decides to do a mid-cycle product rejuvenation. The problem is, you never know when/if that’s going to happen.

The best I can do therefore is provide some examples of  some of the better sign up offers I’ve seen and instances when acting early was better than acting later, and vice versa. This obviously won’t be a comprehensive list, so feel free to walk down memory lane in the comments and share some other examples of bonuses that are no longer available.

2014-2015: The DBS Altitude rejuvenation

Image result for dbs altitude

The DBS Altitude card had been around since 2007, and had actually gone through something of a devaluation since then. The 1.6 mpd rate was reduced to 1.2 and the limo benefit quietly disappeared too.  But some time between 2014 and 2015 DBS decided to really push applications on the card.

The first thing they did was add a bonus category of 3 mpd on online hotel/flight bookings. But there were also two great bonuses that I recall. The first was the DBS Altitude Visa’s incredible sign up offer where you got 12,000 miles for spending a mere $800 within 1 month of approval. What’s better is that you could take advantage of this even if you were an existing DBS cardholder.

The second was the DBS Altitude AMEX offering a 50% bonus on all miles earned within the first 6 months of approval, without cap. That meant earning 1.8/3/4.5 mpd on local/overseas/online hotel and flight bookings. Without cap. 1.8 mpd on local spending was pretty much unheard of, and you can bet I put every single dollar of spend I could on this card during the period

The rejuvenation seems to be over as recent bonuses have been comparatively lackluster. The most recent one (which ended June 2017) differentiated between new and existing DBS cardholders. The spending requirement is the same for both ($1,000 each month for 2 months after getting the card) but existing cardholders only get 7,000 miles whereas new cardholders get 10,000 miles after meeting the spend. So in other words, you need to spend more now, and you get fewer miles.

2013-2016: The Krisflyer Ascend freebies

Image result for krisflyer ascend

The Krisflyer Ascend card used to be a fantastic deal when it first launched in 2013. I went so far as to call it “The Best Card You’ll Never Use” (some people took objection to that because there was a decent sign up bonus at the time, and that’s fair enough. But I was plenty happy to sockdrawer it). Although the miles earning rates were miserable, they did have good free gifts. When you signed up, you got a voucher for a free night at any property in the Millennium Hotels chain, four lounge passes plus 5,000 bonus miles when you made your first spend of any amount. Best of all, they waived the first year annual fee.

Image result for krisflyer ascend millennium

So what I’d advise people to do was get the card, swipe a nominal amount, enjoy the lounge and hotel vouchers and cancel the card when the fee came due in the 2nd year. When I travelled with my friend to London, we each got one card and saved two nights on accommodation in one of the most expensive cities in the world.

But then they tightened the gifts sometime in 2016. First, they added minimum 2 or 3 night stay requirements at certain properties before you could use the free night voucher (including a 2 night minimum for the 2 millennium hotels in Singapore, I presume to deter people who got the card just for a free staycation). Second, they increased the annual fee to a hefty $337 (from $256) AND removed the first year fee waiver. Suffice to say, it’s a good idea to keep a wide berth now.

2012-2017: The Long Unwinding road for the ANZ Travel Visa Signature

Image result for anz visa signature

Here’s an example when acting sooner was better than acting later.

Remember this guy? When it launched in July 2012 it was incredible.  1.4/2.8 mpd on local/overseas spend meant it was the market-leading card for miles earning. You also had unlimited airport lounge access, 12,000 miles for paying the annual fee and airport transfer with $1,500 of spending.

The fortunes of this card, however, mirrored the fortunes of ANZ in Singapore. As ANZ started declining, benefits started being parred back or taken away.

First, the 2.8 mpd on overseas spend was restricted to only Australia+ NZ. Then, the minimum spend for airport transfer went up from $1.5K to $2.5K to asking you to use your own Travel$ to redeem a limo then disappeared. The unlimited complimentary lounge access was replaced by a system requiring you to spend an astounding $10K per quarter to get 2 measly lounge passes. The renewal miles went from 12,000 to 10,000 to nothing.

It’s perhaps an act of mercy that ANZ is now gone and Travel cardholders will soon be receiving the much superior DBS Altitude. But if you ever want to do a case study of a product not aging gracefully, you need look no further than this guy. Those who got in early on the product enjoyed what was at the time one of the best travel cards on the market. But you know what they say about good things…

2016-today: The Citibank Premiermiles rejuvenation

Image result for citibank premiermiles singapore

The Premiermiles card is no stranger to the market here, having launched about 10 years ago in 2007. But it was only from May 2016 that they started the awesome (and still ongoing) sign up bonus that let you earn 42,000 miles with a S$10,000 spend in the first 3 months plus paying the annual fee.

$10,000 is no doubt a high mark to hit, but payments to Cardup and iPayMy do qualify in your spend (no matter what some ill-informed CSOs might tell you) so there are ways to hit that threshold if you plan your spending carefully.

That’s not to say that existing cardholders have lost out either- those of you who own the Citibank Premiermiles Visa have a tremendous promotion to take advantage of now too, with the opportunity to buy miles at less than 1 cent each. This promotion is only open to those who have had the card for at least 6 months.

Conclusion

I’m sure there are many other examples of how acting early is better than acting later (and vice versa). The HSBC Visa Infinite was a much better proposition a few years ago, as it’s since seen a devaluation of benefits and a hiking of its annual fee. But the Citibank Premiermiles is arguably a better card to get in on now, thanks to the generous sign up bonus. And how do you account for random targeted sign up promos like this that pop up now and then without rhyme and reason?

Short answer: you can’t. And that’s the moral of the story- it’s pointless to fret about whether a better offer may come around in 6 months, or a year, or (in the case of the Premiermiles) 10 years down the road. All you can do is look at the current offer and decide whether or not it works for you. If it does, sign up with no regrets. If not, wait a while and see what happens.

Feel free to share other great sign up bonuses you’ve seen or times you wish you’d waited. Would love to learn more and discuss them.

 

 

Does playing the miles game affect your credit score?

One of the most common objections I get to playing the miles game goes something like this:

If I apply for multiple cards and chop and change my card portfolio based on sign up bonuses, it’s going to have a negative impact on my credit score. Then I’m going to lose out when I apply for a housing/car/education loan

That’s certainly a legitimate concern. The difference between an high and a low credit score can will mean additional interest costs, a smaller loan amount and the potential of being rejected outright for a loan altogether.

So does playing the miles game necessarily mean taking a hit to your credit score? Is owning multiple cards a bad thing? And just how is your score calculated anyway?

I reached out to CBS for this article but didn’t get a response. Twice. But who needs them, we’ll figure it out ourselves!

What is a credit score?

A credit score is a 4 digit number between 1000 and 2000. The higher the score, the lower your odds of defaulting. Score ranges correspond to two letter grading. For example, someone with an AA score (1911-2000) has less than a 0.27% chance of default. Someone with a HH score (1000 to 1723) has a 3.48% chance of default or higher.

It’s interesting because 3.48% doesn’t sound very high in and of itself, but it’s enough to freak banks into charging you a really high rate of interest (or declining to lend to you at all). But what do I know about credit modelling anyway.

How can I get a credit report?

You can buy a credit report from CBS for $6.42 to see your score. The good news is that if you’ve applied for a loan, overdraft or credit card recently, you’ll be able to get one for free. Consumers can get their free online report within 30 days of the date of their letter of approval or rejection. And even if you haven’t, Citibank is sponsoring 9,000 free credit reports until 13 Oct.

How is my credit score calculated?

We know that your credit score has 6 components. However, credit scoring is based on a proprietary algorithm that is not disclosed by the agency, so the exact weightage of each component is a mystery.

The 6 components that make up your score are-

(1) Credit Utilization Pattern
This is the amount of credit you’re currently using or owing on all your accounts.

(2) Recent Credit Applications
This is the number of newly-opened credit accounts that you have. All things equal, opening too many new credit facilities in a short period of time will lead to you being dinged on this dimension (but the extent to which it counts is debatable- see my example below)

My understanding is that unlike what happens in the States, average age of credit is not a factor the agencies here take into account when computing your credit score.

(3) Account Delinquency
This refers to whether or not you currently have any delinquent payments on your credit facilities

(4) Credit Account History
This sounds similar to (3), but my understanding is that this is more of a historical trend. If you frequently have (3), you’ll have a bad (4). The previous 12 months is given the highest weightage when considering this aspect.

(5) Credit limit/Available credit
This refers to the total amount of credit you have extended to you (as opposed to (1) which is how much of it you’re using)

(6) Enquiry Activity
This refers to the number of credit pulls done on your account. Each time you apply for a card, the bank asks for a credit report and a record is made. A significant number of records may indicate that a person is trying to borrow heavily.

For what it’s worth, I reached out to Budget Babe who checked with some friends who work in this industry and they’re of the opinion that presence of defaults + late payments are the biggest black marks and have the highest weightage. That sounds about right to me.

Credit scores do not look at your age, salary, employment history or type of house (weird because I’d imagine your ability to repay would depend on the assets you had on hand no?). Your credit history overseas will not affect your score in Singapore because there is no cross-border exchange of data.

Does playing the miles game hurt your credit score?

Here’s my situation.

I have no outstanding loans or credit card balances, with no history of bankruptcy or defaults.

In the last 12 months, I have applied for 10 credit cards (3 still-unactivated AMEX cards just to get free Shopback money, SCB Bonus$aver card for $188 of free money, ICBC Visa and Unionpay for $200 of free money (sensing a trend yet?), Citibank Rewards MC, UOB PRVI MC, OCBC Voyage (given to me with compliments of the OCBC team for the purposes of writing this article, since cancelled, and the CIMB Visa Infinite). I have also closed 5 credit cards. I currently have 22 outstanding cards.

In graphical terms, here is my credit card application history since I moved back to Singapore in November 2014 to work.

All my cards have GIRO arrangements that pay off the full balance every month. In the past 12 months I have missed 1-2 payments on my card, due to timing differences between applying for GIRO and it getting approved.  I got a call from the bank within a few days of the missed payment, paid it immediately and got the late fees and interest waived.

My credit score is 1943 with a 0.17% chance of defaulting.

So it seems that despite my big spike in credit card applications in the last year and my general habit of applying for, holding and cancelling a lot of cards, my credit score hasn’t been adversely affected.

What’s even more interesting is that I applied for a separate report in November 2015 and my score was 1929 with a 0.21% chance of defaulting.

At this point I had been working in Singapore for exactly one year, and had applied for 16 credit cards in that period. I’d have thought this would be poison to my credit score, but yet it still came out ok. And as I used those cards and paid off my bills on time, my credit score improved marginally.

So based on my experience, “recent credit” and “enquiry activity” is not as important as utilization pattern or account delinquency. It seems that as long as you pay the bills regularly and don’t take on loans, you’re ok.

We can’t draw conclusions from just one data point, however, so I reached out to a few friends in different circumstances.

 Outstanding Loan/CCMissed Loan/CC paymentNo of CCRemarksGrade
Friend 1NoNo5average cc useAA
Friend 2NoNo2BB
Friend 3YesNo6above average cc useBB
Friend 4NoNo2barely uses credit cardsBB
Friend 5NoYes- 11FF
Friend 6NoYes- 42barely uses credit cardsGG
Friend 7NoNo20applied for 20 cards in 7 monthsHH

Friend 5 and 6 should be a warning to anyone, miles chaser or not, who uses credit cards. They missed payments because of sheer forgetfulness rather than any financial difficulty, and unlike me they only realised it on the next billing cycle, rather than a few days after the missed payment. But too bad, it’s a black mark on their scores and one that will linger for at least 6 months, possibly longer. Friend 6 missed 3 or 4 payments when overseas 2-3 years ago, and those black marks are still there.

But that’s also because Friend 6 doesn’t really use cards normally. So there’s no opportunity for her to improve her score by demonstrating responsible credit use. I suspect that’s what stopping Friend 4 from getting AA too. He has no loans, always pays bills on time, but has a grand total of 2 cards which he barely uses.

Responsible credit card use is what I think is helping Friend 3- she has a substantial housing loan on the books, but has above average credit card use, which she always pays on time and in full. That probably helps maintain her BB rating.

Friend 7 can be seen as a cautionary tale against overenthusiastic card application, but if she demonstrates a responsible use of credit over the next year I believe she’ll be AA/BB before long.

So my take is that owning multiple credit cards in a short period of time may hurt your credit score initially (although it didn’t for me, for some reason), but as you build up a track record of paying your bills in full and on time, your score will start to pick up even faster than someone who has only a couple.

Playing the miles game responsibly

I don’t think playing the miles game is mutually exclusive with the responsible use of credit. In fact, done properly, the miles game can help you build a healthy credit score.

Use the miles game to build a credit history

I know a friend who had a philosophical objection to credit cards. A family member had misused them and ended up in great debt, and the trauma of the experience led her to conclude that she would never get one for fear of ending up in a similar situation.

I sympathise, I really do. But that’s not the right solution either. You see, if you never use credit at all, your credit score will be CX. That’s not a good thing, because it means that banks have no understanding of your history, and you’re an unknown unknown to them. So come the day when you do need to take a loan (and that day will come), you’re going to run into problems.

The proper way to build a credit score is not to avoid credit cards, it is to use credit cards responsibly. It’s much better to get a couple of cards and pay off your balances on time to demonstrate to banks that you’re capable of handling credit responsibly.

From that point of view, playing the miles game may lead to a short term hit on your credit score, but as you pay off bills regularly your score can improve significantly.

Set up GIRO for all your cards

Some people tell me that if they have multiple cards they’ll end up missing payments and hurt their credit score. I then ask them, incredulously, why they haven’t heard of GIRO.

I have heard the most absurd excuses for not setting up GIRO. “Oh, it takes too much time” “Oh, I want to keep track on how much I’m spending” “Oh, the pain of paying the bill manually each month will remind me not to overspend”

Pfffffftttttt. What rubbish. GIRO isn’t as instant as I’d like it to be (I think it’s horribly antiquated that we need to fill out and mail in paper forms for cross bank payments) but it takes 5 minutes of your time and the rest is all waiting. And once it’s done you don’t need to worry about forgetting a payment.

Regarding the “I want the pain of paying the bill manually so I know how much I’m spending” argument, if you can call it that- whether or not you use GIRO, it’s your own personal responsibility to look at your consolidated bills each month to know what your P&L looks like. I don’t see why having a GIRO arrangement should stop you from doing that monthly exercise.

Missed payments are very, very bad for your score, and very, very avoidable. A responsible miles chaser will always have GIRO arrangements.

Treat credit cards are debit cards with rewards, not sources of credit

If you treat your credit card like a debit card and never use it to spend more than you have, you’ll be fine. Banks earn a surprising amount of money not from merchant fees or annual fees, but from late payment and interest. It’s an oxymoron, but you should never view credit cards as a source of credit. If you’re short on funds, there are much cheaper options to borrow money on than a credit card.

And even if it’s technically within your means, the miles game should not be an enticement to spend more than you otherwise would, in the name of collecting points. Remember: the miles game is a way of avoiding leaving money on the table, not putting extra money down.

Conclusion

One of the things that struck me while researching this piece was how few of my friends (young, educated professionals) had seen their credit score before or even knew what it was. According to Credit Bureau, >80% of Singaporeans have not seen their credit score before. That’s a staggering figure and borders on financial irresponsibility.

If nothing else, I hope this article encourages you to get a free credit report and figure out where you stand. And if you are going to play the miles game, play it right.

The UOB PRVI Miles Visa Infinite Mystery

When I covered UOB’s reduction of the income requirement for their PRVI Miles cards, I noted that it was curious that the income requirements for the AMEX and Mastercard versions were cut to 50K, but the Visa remained at 80K.

At the time I wrote it off as an oversight, figuring that UOB would update the site a few days later. After all, it wasn’t like the PRVI Miles was a special tier of Visa- as per the branding on the card it was just plain vanilla Visa, not Gold, Platinum, Signature or Infinite.

And then I got this comment from Dennis

Aaron – not sure how much truth is in this but running the PRVI Miles Visa BIN through a bunch of online databases seems to suggest that it’s an Infinite :O

Even though the bank doesn’t market it as such (unlike the MC version which is clearly marketed as a WMC), perhaps that’s the reason why the income req hasn’t come down yet. (and also how they’re able to make enough money to sustain 1.4mpd)

Pffft. I thought. Some nutjob on the comments. Just humour him.

And then I got this from Matthew

Hi Aaron,
I can indeed confirm that UOB Privi Miles codes under Visa Infinite.

I registered for Visa Infinite Concierge under with the card as well as the Hilton Fast Track to Gold with 2 stays/ 4 Nights.

A bit of a shocker for me as well.
Cheers.

I follow the principle that if one person tells me something it’s unreliable, but if two people tell me something it’s gospel truth. This philosophy has worked out swimmingly for me, which is why I am convinced global warming is a liberal hoax. Stupid polar bears.

Gospel truth or not, I still decided to verify it for myself with my friend’s card (I only have the AMEX and MC versions). But how do you tell if something is a Visa Infinite when it doesn’t say so on the tin?

Image result for uob prvi miles visa

(1) Checking the bin on bindb

For the uninitiated amongst you, a Bin is a Bank Identification Number. I’ll let bindb explain it better.

The Bank Identification Number, also known as the credit card bin can tell you the name of the bank that issued the card, the type of card like Debit or Credit, brand of card Visa, MasterCard and level of card like Electron, Classic and Gold. From the bindatabase you can also check other details about the card and issuer. Credit card bin numbers are the first 6 digits of a card number.

I plugged in the six digits and this is what came out

Holy moley. To make sure it wasn’t just this site saying it, I also looked it up on binlist.net, binchecker.com, bincodes.com, and exactbins.com. All of them concurred.

That’s pretty much game, set, match, but in case you wanted more proof…

(2) Registering for Visa Infinite Concierge

One of the centrally-provided services that Visa has for its Infinite card tier is a concierge service. I wasn’t too wowed when I used them a few months ago, but that’s not what’s relevant here.

What’s relevant is that before you use the service yo need to register, and the form asks you for the first 9 digits of your Visa Infinite card. Entering the UOB PRVI Visa numbers checked out

So that’s two data points in favor.

(3) Registering for the Hilton Gold fast track offer

I decided to do one more test.

Once upon a time anyone with the first six digits of a Visa Infinite card could get instant Hilton Gold status. But that got abused like you can’t imagine, so they eventually tightened the system up to the point where it’s no longer a straight match but rather a status challenge.

Registration for this worked perfectly with the PRVI Visa.

What’s going on?

Ok, so the PRVI Miles Visa is a Visa Infinite. But why isn’t it branded as one? This is going to involve a lot of speculation from me because I’m not privy to the B2B dealings between Visa and various banks. If you know better, please feel free to chime in.

First, does it cost UOB more to issue a Visa Infinite than a Visa Signature/Platinum/regular card? Intuitively it seems the answer should be yes. After all, Visa Infinite has a concierge and a few other exclusive perks and those all cost money to provide. But if it does, why wouldn’t UOB want to play that up in its branding? It would certainly help raise the card’s profile, because Infinite branding still means something (unlike how Platinum and Signature have become mass market). But instead, UOB has just stuck a regular Visa logo on the cardface. Why would UOB be paying more (assuming it is) and not reaping the branding benefits of that?

Could it be because there’s some minimum income required if you want to market a Visa Infinite card? Based on what I know, all Visa Infinite cards in Singapore have a minimum income requirement of S$120K (I know CIMB will issue a Visa Infinite if you put a fixed deposit collateral of $50K, but let’s ignore that for the moment). So perhaps UOB isn’t allowed to market the card as a Visa Infinite because its income requirement is only $80K. But that brings us back to the previous question- why would UOB want the PRVI Visa to be a Visa Infinite in the first place? What benefit does it give them when they don’t market it that way?

Perhaps it’s because UOB doesn’t want to cannibalize demand for its UOB Visa Infinite. But that still doesn’t add up to me, because the UOB Visa Infinite @ $350K annual income is appealing to a very different market from the PRVI. And besides, the UOB Visa Infinite comes with a host of different privileges (eg special invitations to frou frou events) that the PRVI can’t hope to compete with. And it still doesn’t answer why UOB wants the PRVI Visa to be a Visa Infinite when it doesn’t even market it as such.

So that’s what I can’t figure out now. Help me out guys. What is the purpose of having a stealth Visa Infinite?

Do you need a Visa Infinite?

I’m not completely sold on the benefits of having a Visa Infinite, but just so you know what you’re getting yourself into, here are some of the exclusive benefits (I’ve only listed those which are truly unique to Visa Infinite- a lot of the benefits that banks list for their Visa Infinite cards are really things you could get with Signature/Platinum/any other type of Visa, eg the Visa Luxury hotel collection)

Of the benefits listed above, I’d say National Car and Hilton status are the most useful, It’s good to have National Car Executive status because it gives you access to the Executive Aisle, which normally has nicer car options stocked in it than the usual Emerald Aisle. If you have no idea what I’m talking about read this and this. Likewise, Hilton Gold is arguably one of the best mid-tier statuses to have.

From time to time there are special offers that pop up on the internet for Visa Infinite cardholders only. So it could be useful to have a VI on hand to take advantage of such deals.

Click here to apply for a UOB PRVI Miles Visa card

[HT: Dennis and Matthew]