If you’re a UOB PRVI Miles cardholder, you may have received a PRVI Pay offer in the mail.
On the surface, it offers the chance to buy miles at 1.95 cents each. That’s decent, but not life-changing. Before you throw it in the trash, however, what if I told you that it’s possible to cut the price to 1.35 cents each?
How does UOB PRVI Pay work?
First, a quick refresher.
PRVI Pay is UOB’s “no-questions-asked” miles purchase facility. Unlike similar facilities offered by Citibank and SCB, you don’t need a tenancy agreement, tax bill, MCST invoice or any sort of documentation to use it.
A cardholder may opt to charge, say, S$10,000 to the PRVI Pay facility. That amount is deposited in cash into his designated bank account, after which S$10,195.50 (assuming a 1.95% fee) is charged to his UOB PRVI Miles Card. He is awarded UNI$2.5 for every S$5 (i.e 1 mpd) charged to the facility (excluding the admin fee).
The cardholder takes the S$10,000 to pay off his card bill. He’s then out of pocket S$195.50, for which he received 5,000 UNI$ (10,000 miles)= an effective cost per mile of 1.95 cents each.
UOB PRVI Pay’s targeted offer
From now till 31 July 2020, targeted UOB PRVI Miles cardholders can choose from three different PRVI Pay payment plans:
- One-time payment: 1.95%
- 3-month payment: 2.2%
- 12-month payment: 2.7%
Now, you could take the one-time payment option and walk away with paying 1.95 cents per mile, as I illustrated above. But the return of the 12-month plan creates an opportunity to offset the cost of your miles, lowering the effective cost to ~1.35 cents each
How does it work?
- Apply for S$10,000 using the UOB PRVI Pay facility and pick the 12-month option. With a 2.7% fee, you’ll pay a total of S$10,270 over 12 months, and receive S$10,000 in your designated bank account.
- Take the S$10,000 and put it in a SingLife account, which earns you 2.5% p. a on the first S$10,000. The 2.5% p.a rate is subject to change in the future, but you can withdraw your funds immediately without penalty should that happen
|SingLife is a capital-guaranteed insurance savings plan that offers 2.5% p.a on the first S$10,000, and life insurance coverage. I don’t earn anything from them (except interest).|
Each month you’ll repay S$833 to UOB (S$10,000÷12, with an extra S$270 in the first month to cover the admin fee), but you’ll also earn interest on the cash parked with SingLife.
Let’s assume you take out S$833 from the SingLife account each month to offset the repayment to UOB.
If my maths is correct, your equation should look something like this:
|Month||Charged to Card||UNI$
|Interest from SingLife
@ 2.5% p.a
|*The S$270 admin fee is charged in full with the first installment
^ You don’t actually earn 10,000 miles because of UOB’s rounding policy- your monthly installment is S$833, but it’s rounded down to S$830 when calculating UNI$
All in all, you’ll earn S$135.47 in interest, which offsets the S$270 fee to give a net cost of S$134.53.
You’ll also receive a total of 4,980 UNI$ (9,960 miles), which means you’ve basically paid 1.35 cents per mile.
Other alternative strategies
If you’re able to earn more than 2.5% p.a on the funds from UOB, your cost per mile naturally decreases.
Assuming you’re still on the BOC SmartSaver account and you’re willing to meet all the conditions for bonus interest, you could earn up to 3.55% p.a, or S$192 of interest. This reduces your cost per mile even further to 0.78 cents each.
Of course, this requires that you spend at least S$1,500 a month on the now-nerfed BOC Elite Miles World Mastercard (or any other BOC card), and given its dismal 1/2 mpd earn rates for local/overseas spend, you’ll have to factor in the opportunity cost of lost miles too.
The catch of this method, if you want to call it that, is that you’re limited to buying 10,000 miles if you take the SingLife route (because only the first S$10,000 earns 2.5% interest).
However, if you’re able to make the BOC SmartSaver work for you, you’re looking at 3.55% interest on the first S$60,000 (not to mention a lower cost per mile), which means the opportunity to buy up to 60,000 miles. It’s a relatively low-cost way of buying miles, and well worth considering if you’re in the market.
Don’t get too hung up on these two methods specifically. You’re perfectly welcome to find other uses for the UOB PRVI Pay funds that yield a higher return and help lower the cost of miles.