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What you need to know before you buy miles

On this site we’ve covered a lot of ways that you can earn miles through your everyday spend. But what if you’re still short and need to buy additional miles? Well, there are illegitimate and legitimate ways of going about that, but since we are all law abiding straight shooting citizens, we shall only discuss the legitimate options here (back alley, 10 minutes, trenchcoat and dark glasses)

When analyzing the new UOB PRVI Pay feature, I went a bit overboard and put together every opportunity I could think of to buy miles in order to see how the PRVI Pay measures up. Here’s what I made-

MethodTypeImplied Income ReqCents Per MileAnnual Limit
SCB VI Tax Payment- >$2K p.mPayment Facility1500001.14Tax bill
HSBC VI IRAS Payment- >$50K p.a (1)Payment Facility1200001.2Tax bill
HSBC Premier MC IRAS Payment (2)Payment Facility300001.25Tax bill
HSBC VI- Premier CustomerWelcome Gift1200001.3935000
HSBC VI IRAS Payment- <$50K p.aPayment Facility1200001.5Tax bill
SCB VI Tax Payment- <$2K p.mPayment Facility1500001.6Tax bill
SCB VIWelcome Gift1500001.6835000
HSBC Visa Plat/Revo Tax PaymentPayment Facility300001.75Tax bill
Citibank PM AmexAnnual Fee800001.7815000
HSBC VI- Regular CustomerWelcome Gift1200001.8635000
iPayMy/Cardup with UOB PRVIPayment Facility500001.86Unlimited
UOB Reserve VI "Pay Anything"Payment FacilityInvitation1.9Unlimited
Citibank PM VisaAnnual Fee500001.9310000
DBS AltitudeAnnual Fee300001.9310000
OCBC Voyage- Option 3Annual Fee1200002500000
UOB PRVI PayPayment Facility50000 2Unlimited
OCBC Voyage- Option 2Annual Fee1200002.14150000
Citibank PrestigeAnnual Fee1200002.1425000
iPayMy/Cardup with DBS Altitude/Citibank PM VisaPayment Facility300002.17Unlimited
DBS Altitude- Tax PaymentPayment Facility300002.5Tax bill
OCBC Voyage- Option 1 (3)Annual Fee1200003.2515000
Buy from Singapore Airlines (4)Stupid05.51Unlimited

(1) The HSBC website says that $1=0.4 miles for tax payment facility, but I have received reports that VI holders have received 1/1.25 mpd as per their relationship bonus
(2)  The income requirement to get a HSBC Premier MC is $30,000, but you need $200K in deposits to open a HSBC Premier account
(3) OCBC Voyage Option 1 involves paying $488 to get 15,000 Voyage miles. These can be converted to Krisflyer miles at a 1:1 ratio but are technically more valuable than Krisflyer miles as they can also be used to pay for revenue fares at a fixed value per mile.
(4) SQ charges US$40 per 1,000 miles purchased. Price shown here is reflective of current exchange rates. The only way I could justify paying this is if I needed the miles right this minute, as SQ will credit them instantly

In the PRVI Pay article I decided to focus more on just PRVI Pay, but I think it’s good to have a separate article where we walk through the different options for buying miles and the pros and cons of each.

Things to consider when choosing among miles buying options

Not all the options in the table will be available to everyone. Therefore, just because a cheaper way of buying miles exists doesn’t imply you should rule out everything that costs more.

Which methods do I qualify for?

Basic, almost stupid question, but still important.

Unfortunately, you will need to command a pretty high income if you want to take advantage of some of the better miles buying deals. The cheapest deal now (if we ignore the bigass Citibank promo that, unfortunately, isn’t open to everyone) is 1.14 cpm via the SCB VI tax payment facility. If you spend more than $2K in a month on your SCB VI and put your tax bill on the card, you’ll earn 1.4 mpd for an admin fee of 1.6%. That requires you to earn a minimum of $150K a year though.

In fact, if I look at all the options available, the cheapest price you can access with an entry-level income is 1.75 cpm via the tax payment facility on the HSBC Visa Platinum/Revolution cards (HSBC Premier Mastercard has a $30K income requirement and lets you buy miles @ 1.25 cpm, but you need $200K in deposits with the bank to qualify for a Premier account). And even then the miles you can buy is limited by the amount of your tax bill.

A Cardup/iPayMy combination with UOB PRVI is probably your best bet if you need to buy a large quantum of miles and don’t earn in the 6 digits. Fortunately, UOB PRVI just reduced its income requirement from $80K to $50K so this method has become more accessible. Unfortunately, as I pointed out before, using Cardup/iPayMy requires a bona fide business expense like a tuition fee bill, condo management fee, tax bill etc. You can’t just send money to yourself.

You can send money to yourself via the UOB PRVI Pay feature, though. UOB doesn’t give two craps what you’re getting the money for- drugs, booze, humanitarian reasons. You just tell them how much and where to deposit the money, they bill your card for that amount + the 2% admin fee, you earn 1 mpd and everyone is happy. Assuming you’re ok with paying 2 cpm (see below)

What’s the limit I can buy/ how often can I exercise this option?

Another key question, because annual fees can only be paid once a year. Once I’ve paid the $192.60 on my DBS Altitude and got my 10K miles, I can’t do it again for another year (I could get the Visa and AMEX versions and pay the annual fee twice, of course, if I were so inclined).

You’ll also note that I’ve distinguished between “welcome gift” and “annual fee” in the table above. A welcome gift is a one time opportunity to purchase miles, which is subsequently not available. An annual fee can be paid each year. To my knowledge, HSBC VI does not give you renewal miles when you pay Year 2’s annual fee. SCB VI apparently offers 20,000 miles for paying Year 2’s annual fee, but that works out to 2.94 cpm which is too high for my liking. This should give people doubts about holding the card beyond the first year, unless you really dig the benefits.

Where tax payment facilities eg HSBC/SCB are concerned, I can’t simply go to them and say “hey, my tax bill is $500K, gimme.” I have to submit copies of my tax bill and they’ll give me miles based on that actual amount. No Citibank Rewards/AXS prepaying the gahmen’s working capital balance here (shhhh)

The only truly “unlimited” options (well, they’re limited by your credit limit) are

  • Buying at 1.9 cpm via UOB RVI’s Pay anything feature (but you need a huge chunk of income to access the UOB RVI…)
  • Buying at 2 cpm via UOB PRVI Pay (but is 2 cpm a good price?)
  • Buying at 1.86/2.17 cpm via Cardup/iPaymy and UOB PRVI/DBS Altitude (but requires a bona fide bill)
  • Buying at 5.51 cpm via SQ (lube up)

Should I be buying miles?

Image result for singapore airlines new first class

Maybe we should have started with this question.

Buying miles can certainly be a much cheaper option of getting business and first class flights. Take Singapore to Sydney, for example. Revenue tickets would cost you

  • Economy- $852 to $1,592
  • Premium Economy- $1,732
  • Business-$4,212
  • First-$8,412

If you use miles, on the other hand, you’d pay

  • Economy-56,000 miles + $162
  • Premium Economy- 90,000 miles + $162
  • Business- 116,000 miles + $162
  • First- 160,000 miles + $162

So depending on what price you pay for miles, there are potentially some sweet deals to be had. Here’s how buying a ticket compares to buying miles and redeeming, in the example of Sydney.

Note: for economy I took the straight average of fares available. Ratio refers to the ratio of the price you’d pay for miles compared to the revenue price

First and most important observation: this chart shows why it is totally not worth it to redeem miles for economy or premium economy. If you pay 2 cpm and redeem those miles for economy, you’re potentially paying even more than you would have if you bought that ticket outright. You can see that buying miles to redeem on business and first class is so much sweeter, even at the 2 cpm mark.

Second, this chart doesn’t reflect the value of certainty. Award flights may not always be available for immediate confirmation on the dates you need and for the number of seats you need. So, depending on how much you value certainty, you’d need to adjust the miles figures to reflect the cost you incur when you can’t get immediate confirmation. Waitlisting is, shall we say, not fun.

Third, you need to account for the value of miles you’d earn had you bought revenue tickets. This effectively acts as a rebate on the revenue ticket price, and will reduce it ever so slightly.

But, assuming you find yourself in a situation where instantly-confirmable award space is available, it absolutely makes sense to go the buying miles route. You’ll need to factor in the time lag between the time you buy the miles and booking the ticket though, during which the space may vanish (SQ doesn’t do award holds).

Should I be buying miles speculatively?

Image result for singapore airlines new business class

The previous question assumed that you had a planned use for miles in mind already. If that’s the case, and if the award space exists, you’d be a fool to pay full price rather than buying miles.

But what if you don’t have an upcoming trip planned? What if you’re pretty well-stocked already? This is a more complicated question.

Most of the miles laojiaos will tell you that you absolutely should not buy miles speculatively. And I’d tend to agree with them. Miles are the worst investment to hold. There is no deposit insurance. They do not earn interest. They can only be devalued, sometimes with short or little notice. Miles are only as valuable as airlines’ willingness to accept them. They’re pretty much a fiat currency. Earn and burn etc etc.

I would nuance that by saying you normally shouldn’t buy miles speculatively, but if an excellent opportunity comes around and you’re quite certain you’ll travel in the next 6 months then I wouldn’t feel too bad for loading up.

Case in point: the current insane Citibank Premiermiles visa offer to buy miles at 0.76 cents each is something I don’t think we’ll see again for a long time, so I’d definitely go for that if it were open to me.

I would also say that you should ideally have a healthy miles balance in your frequent flyer account to give yourself flexibility to make plans on the fly- there’s nothing more annoying (or nail biting) than to see award space on your perfect dates, transfer your points over and have a few nerve wracking days of F5-ing the screen waiting for them to appear. What’s healthy? For me that’s around the 100-150K mark, but I know it will be different for everyone (and that there will be those who believe in keeping even smaller amounts on hand).

Conclusion

For better or worse, SQ hasn’t attempted to monetize Krisflyer by selling miles on the cheap, like the US airlines have done. Therefore the best options for buying miles, at least for now, are offered through the banks. I hope this article gives you a better understanding of what’s out there, and what is (and isn’t) worth springing for.

Comparing the rounding policies of 3 major miles cards

A while back I wrote an article about how I felt the rounding down that UOB did on its PRVI Miles card wasn’t that big a deal, assuming you made a good mix of various sized-transactions. Their 1.4 mpd general spending rate is higher than the 1.2/1.3 mpd you’d earn on other cards, and therefore you’d earn back the difference on average.

I hubristically called this article “putting this 1.2/1.4 mpd rounding issue to bed”, but it turns out that if anything it just opened a can of worms. I’m glad my readers know their stuff better than me, because there’s a whole long chain of comments laying out exactly how each bank does its rounding. Turns out I’m guilty of oversimplifying some of the calculations, and I wanted to take this opportunity to lay out the situation for avoidance of doubt.

Let me state something upfront- this is really an article more for the boffins out there. On a practical basis, you’re talking about a difference of a handful of miles. Yes, they build up over time, but if you find it too stressful to track things on an individual card basis you could get away with not taking this into account and you’d still be fine, on an overall basis.

Many thanks to all you commenters out there for helping me make sense of this- johnnyboy, Naro, and the rest who were too modest to leave their names.

DBS Altitude

Image result for dbs altitude

DBS’s T&C for their rewards program states the following

DBS Altitude Cardmembers earn 5 DBS Points for every S$5 equivalent in foreign currency purchase and 3 DBS Points for every S$5 local currency purchase. Cardmembers earn an additional 2.5 DBS Points for every S$5 equivalent in foreign currency online flight & hotel purchase and an  additional 4.5 DBS Points for every S$5 local currency online flight & hotel purchase, capped at S$5,000 spend on online flight & hotel purchases per calendar month.

This led me (and many others) to assume that if you spend less than S$5, no points for you. That’s not correct, as DBS does prorate spending.

So if you spend S$3, for example, you earn 3/5*3=1.4 DBS points. DBS rounds points down to the nearest point, so you get 1 DBS point, or 2 miles.

This means that the minimum spending with DBS to earn miles is $1.67, for which you will earn 1 DBS point, or 2 miles for a 1.2mpd rate (The curious thing is that if you spend $2, you earn the same 1 DBS point, but you now have 1.0 mpd). What happens if you spend, say, $8.49? The same prorating kicks in and you earn 5.1 DBS points, rounded down to 5 points or 10 miles.

The interesting thing is- cents matter with DBS because of the prorating. If you spent $8.33, you’d get 4.998 points, which would be rounded down to 4 points or 8 miles.

TL;DR- Minimum spend to earn miles with DBS is $1.67, DBS prorates and awards you points on both dollars and cents spent.

UOB PRVI

Image result for uob prvi

Here is UOB’s policy, from their T&C-

UOB PRVI Miles Cardmembers earn UNI$3.5 for everty $5 charged locally and UNI$6 for every S$5 charged overseas. In the event the UNI$ awarded is in decimal points, the final UNI$ awarded for each transaction will be rounded down to the nearest whole figure.

UOB requires a minimum spend of $5 to earn any points. That’s because they don’t prorate. So spend anything less than that and you have bupkis.

This rounding down to the nearest S$5 results in a form of  “double rounding”. What does that mean?

Suppose I spend $6 on my PRVI Miles card. You might think- ok, round down to $5, and at 1.4 mpd that’s 7 miles. Wrong. $6 spending will first be rounded down to the nearest $5, which gives you UNI$3.5. But that UNI$3.5 will be rounded down again to UNI$3, so you earn 6 miles for this transaction.

TL;DR- Minimum spend to earn miles with UOB is S$5. UOB does not prorate, and therefore you earn points on dollar spending rounded down to the nearest S$5.

Citibank Premiermiles

Image result for citibank premiermiles singapore

Citibank’s Premiermiles Visa T&C state (emphasis mine)

A cardmember will receive, on a monthly basis, Citi Miles which will be credited to his card account at the rate of 1.2 Citi Miles for every S$1 incurred on local retail purchases charged to his card account and 2 Citi Miles for every S$1 incurred on overseas retail purchases charged to his card account. Citi Miles shall be calculated on the amount of each retail purchase transaction and will be reflected in your statement of account as rounded down to the nearest Citi Mile

(The AMEX version is much the same, except the earn rate is 1.3 mpd instead of 1.2)

Unlike DBS and UOB, Citibank awards points on each $1 of spend. This means your transaction ($2.38, $5.95, $10.24 etc) is rounded down to the nearest $1 ($2, $5, $10 etc), multiplied by 1.2 and then rounded down again.

Therefore a spend of $1 earns 1 Citimile, a spend of $2.38 earns 2 Citimiles etc.

TL;DR- Minimum spend to earn miles with Citibank is S$1. Cents are irrelevant as all earnings are based on dollars.

Comparing Spending

This article wouldn’t be complete without a comparison, so I put 4 different cards to the test- the Altitude, the Premiermiles (both Visa and AMEX versions) and the PRVI. Here’s what came out.

You can see that the Premiermiles AMEX is actually a pretty good card due to combination of its 1.3 mpd base rate and practice of awarding on every $1. Eventually at around the $65 mark the PRVI’s superior 1.4 mpd earn rate allows it to overtake the Premiermiles AMEX though.

However, if you’re comparing the Altitude and the PRVI, the inflection point is around $30. At this point, you’re earning 34 miles with both the Altitude and PRVI, after which the PRVI starts earning you more. So if you need an easy heuristic, remember: >$30, PRVI. <$30, Altitude. 

I created the last column just to illustrate a point- if your purchase amounts are below $50, there’s really no point sweating this because you’re losing at most 3-5 miles per transaction. Suppose you do 30 transactions a month. You’re going to lose about 1.4K miles over the course of the year, assuming you got it wrong every single time. Would I rather have those miles? Yes. Am I going to lose sleep for having lost those miles? Probably not. Stick to the rule of $30 and you’ll be fine.

Here’s the excel if you want to play around with the figures yourself.

Download (XLSX, 11KB)

Other considerations

Rounding is an important piece of the puzzle, but it’s not the only consideration. You should also consider

  • The validity of the points earned. Citimiles and DBS points earned via the Altitude card do not expire, UOB UNI$ have a 2 year expiry period. Once transferred to Krisflyer, miles have a 3 year validity
  • The choice of airline transfer partners. UOB UNI$ and DBS points can be transferred to SQ and CX. Citimiles can be transferred to those + Qatar, MAS, Thai, Qantas, BA, EVA, Etihad, Air France/KLM and Garuda, plus Hilton, IHG and Club Carlson
  • Points pooling. A major weakness of Citibank is that they don’t pool your points together. You cannot redeem Citibank ThankYou points (earned from its Rewards card) with Citimiles and pay one conversion fee, rather you need to convert them separately (sporadic reports of getting CSOs to waive this, but definitely not SOP)
  • Annual fees. You shouldn’t be paying annual fees without getting something in return, and to that end the DBS Altitude + Citibank Premiermiles give you 10K miles when you pay the $192.60 annual fee. UOB PRVI Miles gives you 20K miles if you hit $50K spending in a year (AMEX version only), but otherwise does not give you renewal miles. I’d watch this card very closely to ensure they don’t proactively deduct UNI$ from your balance to cover the annual fee, as they are wont to do

DBS updates Woman’s card T&C to exclude Mileslife from 10X

Well, that was fast. DBS has updated the T&C of its Woman’s card to state explicitly that payments made to Mileslife will not qualify for 10X points earning.

In some ways, this is a moot point because the Mileslife MCC is currently coded as professional services, which were always excluded under point i) of the Woman’s card T&C anyway. In fact, I’ve been saying from the start that you should not expect 10X spending bonuses on Mileslife, at least not just yet.

But I know from my discussions with the Mileslife team that they were working to get their MCC changed to a different category in order to enable users to leverage 10X card bonuses, so this definitely throws a spanner into the works.

I find this decision by DBS curious for 2 reasons. First, this has to be a new record in terms of time taken to change their T&C. iPayMy and Cardup were on the market for almost a year before DBS modified its T&C. Mileslife, on the other hand, has been around for just one month. So for DBS to take a pre-emptive move so quickly to shut it down, when Mileslife isn’t currently earning 10X with the woman’s card anyway, is certainly an aggressive step.

Second, it’s strange because of my whole discretionary spending argument, that I laid out here. It is not logically consistent to lump Mileslife together with iPayMy and Cardup, when iPayMy and Cardup are explicitly designed to facilitate non-discretionary spending on things like rent and insurance payments, whereas Mileslife is in the decidedly discretionary area of dining and lifestyle spend.

The recent changes by DBS to restrict your opportunities to earn bonus points on the Woman’s card are definitely concerning, and may point to an overall revamp of DBS’s strategy in light of the demise of the HSBC Advance. DBS has traditionally been very generous in its interpretation of what counts as online spend, but with one less competitor on the market there may be less of a need to compete in this space. The Citibank Rewards and UOB PPV both have a hefty list of exclusion categories, and the Titanium Rewards card is yet to gain significant traction.

I remain hopeful that there will be 10X opportunities with other banks, because those stacked with the ongoing Mileslife promotions make the proposition extremely attractive for dining out.