Putting this 1.2/1.4 mpd and rounding issue to bed

A common objection I get when I recommend UOB cards for miles earning is that these banks round your transaction down to the nearest $5, so a $9.99 transaction earns the same amount of miles as a $5 transaction ($5 @ 1.4 mpd with the UOB PRVI Miles).

Other banks, like Citibank/HSBC, award miles to the nearest $1, so that same $9.99 transaction would earn you 10.8 miles ($9 @ 1.2 mpd.

But the key question you need to ask yourself is this- what is my average/median transaction size? This determines whether or not the enhanced miles earning of a UOB PRVI Miles card (1.4 mpd) can make up for the rounding down effect.

How big a problem is rounding?

Here’s a simple table showing how you end up with transactions ranging from $4.99 to $99.99, comparing a hypothetical 1.2 mpd arrangement (Citibank Premiermiles Visa) with a 1.4 mpd arrangement (UOB PRVI Miles)

(EDIT: 13 July- some of these calculations are technically wrong because I haven’t taken into account UOB’s rounding down of partial UNI$ amounts. The conclusions in this article don’t change, but you can refer to this if you want the technically correct calculations)

What you can see is that once your transaction goes above ~$30, the incremental 0.2 miles you earn with UOB offsets the rounding down effect. The gap only grows bigger the larger the transaction is.

Or fine, let’s take the Citibank Premiermiles AMEX (1.3 mpd) instead and see what happens.

Now, as expected, the “sweet spot” moves upwards in that transactions of ~$55 or above favor the UOB card.

My median transaction size is just under $30, but my average is $270 (it’s skewed because of large business expenses). So although 50% of my transactions are under $30 (and I’m losing out on some miles due to rounding there), I’m still winning overall by using a card like the PRVI because the marginal 0.2 mpd is being earned on some significantly large transactions. 

What you need to realise is that even if you are using the UOB PRVI and have, say, 30 transactions where you’re losing out on 2-3 miles each time, all it takes is a large single transaction of ~$300-450 to put you in the same position as if you were using a 1.2 mpd, no rounding card. And that’s what most people’s transactions will look like, right? You’ll have maybe 30 small transactions in a period and the occasional big ticket purchase.

I mean, sure, if you really wanted to there’s nothing stopping you from swapping between your Citibank Premiermiles and UOB PRVI, depending on the transaction size. But that’s a step too far, even for me.

Other considerations

Moreover, the mpd rate is no doubt important but there are other things you need to consider as well. If you’re comparing the DBS Altitude cards (1.2 mpd, rounding down to nearest $5- for more details on rounding please see the comments where johnnyboy has some excellent analysis. It’s not exactly as simple as I’m making it sound) to Citibank Premiermiles (1.2 mpd, rounding down to nearest $1) then the Premiermiles card seems to be better, but better here is in the context of miles earning potential.

Think about pooling (Citibank has two different currencies (ThankYou points and Premiermiles) that you can’t pool, which forces you to pay two conversion fees), think about transfer partners (Citibank has so many more transfer partners than DBS), think about card and mile earning promotions (like the one currently happening with the DBS Altitude Visa), think about expiry of miles, and the picture becomes a bit different.

So I’d encourage you to do a serious analysis of your own spending patterns in deciding whether the rounding issue will be a hindrance to you.