BOC Elite Miles cardholders: Watch out for mysterious interest charges

I think it’s safe to say that in general, miles chasers have a very high tolerance for pain.

We don’t mind applying for and keeping track of 10+ credit cards. We’ll trek to an out-of-the-way clinic if they have Paywave. We’ll position ourselves, the wife and the baby to Vietnam just to capitalize on a mistake fare. There’s even a legendary story about someone who, during the Citibank Apple Pay 8 mpd promotion, spent hours tapping his phone multiple times at the same terminal to circumvent the $100 transaction limit.

But yet, everyone has their limits. And BOC seems to like to test them.

BOC’s mysterious interest charges

When looking through my monthly card statement, I spotted that I’d been charged interest. This was weird, because I always pay in full, via GIRO. There was no shortage of funds in my account, so there’s no reason why the amount shouldn’t have been settled in full.

I called up customer service and learned the following:

• My amount due for the previous month was $4,007.06
• In the current month, I had a refund of $593.86 credited to my card
• The amount deducted from GIRO was therefore $3,413.20
• However, because the system saw that the payment of $3,413.20 was less than the $4,007.06 owed, it charged interest on the $593.86 “outstanding”!

I was astounded that their system wasn’t smart enough to recognise a refund as a partial “payment” of the amount due, but the CSO assured me she would reverse the interest charges and I’d see it on my next statement.

“So what if I didn’t call in?” I asked.

There was a pause.

“Just call in and we’ll waive it for you,” she said again.

I had a separate discussion with a customer service manager, who clarified that BOC’s system sees merchant refunds as a credit balance, but not a payment of the amount outstanding. He said that this “might” lead to situations where customers get charged with interest when they have merchant refunds and GIRO arrangements.

I highlighted the same point again: that customers have the reasonable expectation that a bank’s systems will properly calculate and charge interest, and that it concerned me the bank had no automated way of flagging and reversing such erroneous interest charges. He said he’d pass the message on.

He went on to say he “didn’t believe” it affected CBS credit scores, and based on my latest credit report, that at least seems to be correct. My BOC payment history shows that full payment has been consistently made.

That said, I’d advise anyone in a similar situation to check their score for themselves, because this is something you don’t want to mess around with.

Now I’m no lawyer, so I can’t speak to the implications of charging interest when it’s not actually due. But from any rational point of view, surely it’s not right to expect the customers to have to spot such things?

Delayed cards, transfer caps and last-century tech

This isn’t the first annoyance I’ve encountered with BOC.

The Milelioness lost her card on 3 July, and reported it the same day. Most banks replace lost cards in 2-3 working days, but most banks aren’t BOC. Days turned to weeks, weeks to months. Calling the bank didn’t help- various CSOs promised me they would “expedite it”, but nothing happened. Finally, the replacement card arrived on 26 August, 36 working days after it was reported lost.

Whatever the reasons for the delay, I think most people would agree that waiting 36 working days for a replacement is just not normal. I mean, the X Card may run out of metal, but have you ever heard of a bank running out of plastic? [Edit: BOC is saying that the reason for the delay was not cardstock shortage, but rather a system switchover. Card replacements should take 7 working days now. Let’s hope so, because 36 working days is insane]

Then there’s the transfer cap that BOC imposed back in March 2019, which makes BOC unique among banks in Singapore in that it caps the maximum number of points you can transfer at one go to 10 blocks, i.e. 60,000 Asia Miles or 100,000 KrisFlyer miles.

If it feels like an arbitrary restriction, that’s because it is. There’s no good reason to cap the number of points that people can transfer at one go (it’s certainly not an IT limitation), and it comes off as an attempt to generate more from transfer fees. At a time when some banks are introducing no-fee transfers on mass market cards, BOC is going in completely the wrong direction.

All this set against the backdrop of BOC’s hopelessly antiquated IT. Let’s face it, we knew from the start that banking with BOC wouldn’t be a walk in the park. Linking your credit card to ibanking requires a trip to a BOC branch. BOC ibanking doesn’t support recurring fund transfers. There’s no online rewards portal, so you need to fill up a form to convert credit card points (at least said form is accepted via email!)

There’s even some concerning security flaws in BOC’s ibanking website. Where other ibanking portals are concerned, closing the browser window and attempting to reload it (control-shift-T on Chrome) will give you an error message and require you to log in again. Doing the same with BOC re-opens your currently active banking session, with full access to your account. Yes, it’s best practice to log out when you’re done with your business, but isn’t the hallmark of a good system that it protects people from themselves?

In light of all this, it’s somewhat apt that more than a year after the BOC Elite Miles card was launched, it still doesn’t appear on BOC’s website.

Why don’t I switch?

Like I said at the start, miles chasers can be very forgiving if you ply them with miles. And since the BOC Elite Miles’ earn rate of 1.5/3 mpd on local/overseas spend is among the best in the market, many would-be switchers find themselves stuck with golden handcuffs.

But that’s not what’s stopping me from switching. Sure, I’d have to go from 1.5 to 1.4 mpd on local spending if I switched from BOC Elite Miles to UOB PRVI Miles, but remember: some of that incremental is offset because I’m spending more on conversion fees with BOC thanks to their transfer cap.

Moreover, now that the OCBC 90°N Card is on the market, I can get 4 mpd on all my overseas spending until 29 Feb 2020, 33% better than the BOC. The OCBC 90°N Card also has no geographic restrictions on payment processing- as long as it’s foreign currency, you’ll earn 4 mpd. In contrast, BOC requires that the transaction is processed outside Singapore.

What is stopping me from switching is the fact I’m using the BOC Smart Saver account.

Unlike most other hurdle accounts, the BOC Smart Saver doesn’t require you to buy any of the bank’s investment products. As someone who prefers to do his own investment, this is a huge plus.

I’m currently earning a very impressive 3.55% p.a on the first S$60,000 of my BOC Smart Saver balance:

• 1.6% from spending >S$1,500 on my BOC Elite Miles card
• 1.2% for crediting a salary of at least S$6,000
• 0.35% for making at least 3 GIRO payments
• 0.4% base interest

The next best alternative, given my circumstances, is to earn:

• 2.4% with DBS Multiplier
• 2.5% with Citi Maxigain (but I can’t withdraw the money without incurring an interest penalty)
• 2.55% with OCBC 360

Giving up my BOC Elite Miles and switching to another bank account basically means forgoing about S$50 a month in interest, or S$600 a year. That’s not even talking about the hassle of updating every one of my GIRO arrangements, so even though I’m tempted to just give up on my BOC Elite Miles card, I can’t do so until I find a better alternative on the bank account side. 

Conclusion

If you’ve got a BOC Elite Miles World Mastercard, you should absolutely monitor your monthly statement and ensure you’re not paying interest when you shouldn’t be.

I’m aware that quite a few otherwise hardcore miles chasers have thrown in the towel on BOC already, either because of frustrations with IT, having to wait inordinate periods of time for a replacement card, or points clawbacks. I can’t speak to individual cases, but I suppose if nothing else this experience helps people answer the question: just how much would you endure for miles?