The Krisflyer UOB Account is Dead on Arrival

UOB launched a new product yesterday, the Krisflyer UOB account that allows you to earn miles through your debit card spending. The rate of miles earning varies depending on your total balance in your account.

The premise sounded intriguing, but there were few details. Would there be a cap on miles earning? Would the account earn any interest? What other terms would be lurking beneath the surface?

Well, the product webpage and T&C have since gone live so I’ve spent some time examining the fine print.

And I cannot begin to tell you how bad this product is. 

Here’s the product summary-

Fees & Charges
-Initial opening balance of S$1,000
-Annual fee of S$53.50 for debit card with first year waived
-Minimum balance of S$1,000 must be maintained, otherwise S$2 per month fall-below fee applies
-S$30 early closing penalty (within 6 months of opening)
-S$10 per additional chequebook

Features
-1,000 bonus miles when you apply and charge a min of S$500 to the Krisflyer UOB Debit card within 30 days of approval (first 50,000 applicants- UOB strikes again!)
-Base mpd: 0.4 (with min S$500 spending in a calendar month)
-Bonus mpd: You earn this additional component depending on your overall account balance

• S$3K to <$100K: 1 mile
• S$100K to <S$350K: 3 miles
• More than S$350K: 5 miles

-Automatic miles conversion to Krisflyer

Benefits on Scoot & Tiger Airways
– Priority check-in and boarding
– Additional baggage allowance
– Standard seat selection
– Convenience fee waiver

Why is this so bad? Let me count the ways

No interest is earned on this account

I suspected this yesterday, but now it’s confirmed. You gotta spend money to earn miles. Your money will earn ZERO interest in this account.

That is implausibly bad. I mean, I love miles as much as the next dude (correction: way more than the next dude) but I’m not going to have S$100K sitting idle just so I can earn 3.4 mpd on my spending. Besides, if you know how to maximise your 4 mpd opportunities this becomes an even worse deal.

For many people, this will already be a dealbreaker. But it gets better…

Your bonus miles are capped, making your effective mpd lower the more you spend

The T&C alludes to a cap, but doesn’t specify what that cap is. However, if you look at the bottom of the promotional webpage, you’ll see this little line that has a dramatic impact on how you view the product-

In case you can’t read that, it says

Bonus Krisflyer miles earned will be capped at 5% of the Monthly Average Balance in the Krisflyer UOB account

This confused me at first because it was comparing miles to money, something that’s not immediately intuitive. What I understand now is that the maximum number of miles you can earn per month is capped at 5% of your monthly average balance (MAB).

So, if your MAB is $350K, you can earn a maximum of 5% of $350K= 17,500 per month. See why that’s confusing? You’re comparing miles and money.

Assuming something possessed you to put $350K in a 0 interest earning account, your math would look like this-

Can you see that once you get beyond S$3,500 of monthly spending, you’re only earning 0.4 mpd on each incremental dollar? That is insane.

Look at the last column- the more you spend, the lower your effective MPD. For someone spending $8,000 a month (not too far a stretch for someone who can afford to park $350K in the bank at 0 interest), you’re earning an effective mpd of 2.5.

If you opt for a more sane amount of maybe ~$100K, the picture gets worse-

Suppose you spent $5,000 a month. You’d be earning 1.4 mpd, which is something you could get with a UOB PRVI miles card, without having to park $100K in a 0 interest earning account.

Play around with the calculator if you want, but the basic facts don’t change. The presence of the cap means that not only do you lose out on the interest, you lose out on what the product is ostensibly supposed to be good for- miles earning.

The bonus miles are for a promotional period only

If those caps weren’t enough to put you off, do note that the T&C imply that the bonus miles (1/3/5 depending on your MAB) is for a promotional period only. No knowing what will happen after that ends.

The Tigerair/Scoot benefits aren’t real benefits

Even if you’re the type who does a lot of regional travel on budget carriers, I wouldn’t get too excited about these benefits-

• Priority Check-in: Your entire party enjoys priority check-in and boarding. This is nice to have, but not something I’d pay for anyway
• Complimentary Seat Selection: This would be a fairly decent benefit, but for the fact that it’s limited only to the principal cardholder. So if I’ve booked a party of 3, only I get to select my seat for free. That kind of defeats the purpose, given that I’d want to seat us all together. If anything it sound suspiciously like a way of upselling you to shell out for the other 2
• Complimentary Additional Baggage: Pfffft. Not a real benefit because of the strings attached. It requires you to buy a minimum 20kg baggage allowance, after which you’ll get a bonus 5kg. And you only get this benefit if you buy the baggage allowance at the time of booking. If you add baggage after initial purchase, you’re SOL.
• Convenience Fee Waiver: This was always a major source of annoyance to me, so I was glad to see a waiver was offered. But once again, it’s not really a benefit. You need to spend S$250 on a Scoot/Tigerair booking in a single transaction, then you’ll get a fee waiver voucher that can be used on your next booking, and here’s the best part. You only get one fee waiver voucher per year

These “benefits” are easily the most ham-fisted and stingy I’ve ever seen (and this from a longtime Krisflyer member). It’s like they really didn’t want to give anything, but finally relented as a favor to you. It’s almost bordering on satire.

I gave OCBC a hard time for its sponsored post, but if I were their marketing team I’d be jumping all over this so called “benefit” as a prime example of how other banks don’t market transparently. If they put front and centre the limitations (most noticeably the fact that the convenience fee waiver is ONCE a year), do you think they’d dare to market this as boldly?

Is there an upside?

It’s really, really hard to think of anything good that can come out of this. But HWZ user dahnoob has a decent idea-

This is actually a decent product to replace the PRVI, provided that you have $3000 lying around and don’t mind locking them in. The advantage of this debit card over the PRVI is that you don’t need to pay anything for points transfers, and they happen automatically every month. The drawback is of course the lack of interest free payment period. Realistically, you would want to put in more than $3k, because charges are debited from the account itself. God knows whether UOB will refuse you your 1.4mpd because ‘your balance fell below $3000 on 21 April, between 10.30pm to 10.35pm’.

(I strongly suggest you read the rest of his/her analysis because it’s spot on)

I agree with him/her. If you’re someone who doesn’t hit the income requirement for a PRVI card (S$80K per annum) but you do spend >S$500 a month, you could put S$3K in this account and ensure that your MAB is above that. It’ll be a bit of micro management, but you’d then have a PRVI card without the conversion fees. Note that you wouldn’t enjoy the 2.4 mpd on overseas spend, of course.

EDIT: As Tim pointed out on the comments below, even if you do this the 5% mileage cap comes back to bite you. A 5% mileage cap on a $3K MAB is 150 bonus miles. 150! Your effective is hence a lot lower than 1.4 mpd.

As per UOB’s own calculator a MAB of $3K with monthly spend of $500 gets you 4.2K miles a year or 0.7 mpd. Wow. The odds keep stacking up against you.

How could they even think this would work?

UOB says it anticipates to draw in S$1.5B from funds deposited into these new accounts. Let me assure you that not a single cent of that S$1.5B will be from me.

I have no idea what was going through the minds of the UOB product team when they came up with this. Who did they think they were targeting?

• Students? (But which students spend >$500 a month (cool kids probably))
• Young professionals who can’t get a “proper” miles earning card? (Now that the DBS Altitude income requirement is only $30K this doesn’t hold water)
• Retirees?   (But can’t they get a secured credit card or simply hold on to the ones they had before retirement?)
• Cash rich/miles poor people? (You don’t get cash rich by being investment dumb, and I’m sure this group would have identified the 5% cap as a major barrier to adoption)
• Gullible people? (probably)

I’m sure over the next few weeks you’re going to have a friend who knows you’re into miles come up to you and say “wah did you hear about the new UOB thing? 5.4 miles leh!” Your job, nay, your duty, is to correct this poor soul and ensure they do not get anywhere near this product.

Say something nice about this product? Sure. I think the card is damn chio.

UOB Team, whatever you’re smoking, I want lots of it.