Banks sweeten credit card deals

[Musicwhiz]

The banks are doing what they do best - targetting people to spend and spend more and more! In this article, a very interesting term is used - SPENDING TARGET, which basically is the total opposite of what consumers should be having, which is a SAVINGS TARGET! I guess we have capitalism and materialism to thank for all these new promotions pushed out by banks to gullible and unwary customers....

Oct 3, 2010
Banks sweeten credit card deals
Reward schemes beefed up in bid to get card holders to spend more
By Lorna Tan, Senior Correspondent

The credit card space is hotting up with banks jostling to encourage card holders to consolidate their spending on their respective cards.

In the case of United Overseas Bank (UOB), it went as far as to allocate 'spending targets' to card holders of its top-end UOB Infinite Card. The 'spending target' is customised for each member and is calculated based on his card spend in the past few months.

These customers were told they would be amply rewarded with up to 10 times the reward points, or UNI$ including a bonus earn rate of 7.5 times when they exceed their 'spending target'. The current earn rate is 2.5 times for every $5 of spend. The promotional period is from Sept 1 to the end of next month.

So if the spend tier is $3,000 and the card holder spent $5,000, the total UNI$ earned would be 5,500 UNI$. The bonus UNI$ will be credited on Dec 31.

In normal circumstances, UOB Infinite card holders - whose annual income is at least $350,000 - would earn only five UNI$ for every $10 of card spend.

For those who love to travel, Citibank PremierMiles card members currently get two Citi Miles for every $1 spent above $4,000 per month. The promotion ends on Dec 31. At the same time, card members receive 10,000 bonus miles when they spend more than $50,000 a year.

Explaining the rationale, Mr Han Kwee Juan, managing director and head of credit payment products at Citibank Singapore, said the bank wants to give customers the rewards they want and will enjoy.

'Over the past few months, we have seen more customers consolidate their spend with us and get rewarded with their dream vacations faster,' he said.

Over at DBS Bank, it is offering a current promotion on its DBS Black Card which enables card holders to earn eight times the reward, or DBS Points. To earn these points, consumers must shop at selected luxury fashion brands like Club 21, Hugo Boss, Max Mara, Max & Co, Y3, Dsquared2 and Kate Spade.

Ms Ooi Huey Tyng, senior vice-president and head, cards and unsecured loans, at DBS Bank, said that tiered rewards are a way of showing its appreciation of loyal customers, as well as catering to their lifestyle and preferences.

'For instance, the DBS Black Card extends accelerated rewards to card holders using the card at their favourite luxury brands,' she said.

Besides such ad hoc promotions, credit card customers benefit from earning rewards points on a tiered system all year round. For permanent rewards, the banks may choose to tie the required spending with certain merchants or a specified spending amount.

For instance, when the DBS Black Card promotion ends on Dec 31, customers will continue to earn four times the regular DBS points with the above retail partners. For all other spending, card holders will earn twice the regular DBS points all year round.

Standard Chartered Bank is believed to be the only bank here that structures its rewards programme based on the customer's total banking relationship and card spending. This means card members receive additional reward points for having a mortgage or fixed deposit with the bank. It does this for customers of its Standard Chartered Visa Infinite and Preferred World MasterCard.

Said its general manager for retail banking products in Singapore and Malaysia, Mr Dennis Khoo: 'Research showed that 60 per cent of consumers will switch more than 40 per cent of their existing spends from other credit cards to a card that rewards their loyalty and total relationship with a bank, as this will help them accumulate more reward points.'

lorna@sph.com.sg

[ncy]

The banks are doing what they do best - targetting people to spend and spend more and more! In this article, a very interesting term is used - SPENDING TARGET, which basically is the total opposite of what consumers should be having, which is a SAVINGS TARGET! I guess we have capitalism and materialism to thank for all these new promotions pushed out by banks to gullible and unwary customers....

Oct 3, 2010
Banks sweeten credit card deals
Reward schemes beefed up in bid to get card holders to spend more
By Lorna Tan, Senior Correspondent

The credit card space is hotting up with banks jostling to encourage card holders to consolidate their spending on their respective cards.

In the case of United Overseas Bank (UOB), it went as far as to allocate 'spending targets' to card holders of its top-end UOB Infinite Card. The 'spending target' is customised for each member and is calculated based on his card spend in the past few months.

These customers were told they would be amply rewarded with up to 10 times the reward points, or UNI$ including a bonus earn rate of 7.5 times when they exceed their 'spending target'. The current earn rate is 2.5 times for every $5 of spend. The promotional period is from Sept 1 to the end of next month.

So if the spend tier is $3,000 and the card holder spent $5,000, the total UNI$ earned would be 5,500 UNI$. The bonus UNI$ will be credited on Dec 31.

In normal circumstances, UOB Infinite card holders - whose annual income is at least $350,000 - would earn only five UNI$ for every $10 of card spend.

For those who love to travel, Citibank PremierMiles card members currently get two Citi Miles for every $1 spent above $4,000 per month. The promotion ends on Dec 31. At the same time, card members receive 10,000 bonus miles when they spend more than $50,000 a year.

Explaining the rationale, Mr Han Kwee Juan, managing director and head of credit payment products at Citibank Singapore, said the bank wants to give customers the rewards they want and will enjoy.

'Over the past few months, we have seen more customers consolidate their spend with us and get rewarded with their dream vacations faster,' he said.

Over at DBS Bank, it is offering a current promotion on its DBS Black Card which enables card holders to earn eight times the reward, or DBS Points. To earn these points, consumers must shop at selected luxury fashion brands like Club 21, Hugo Boss, Max Mara, Max & Co, Y3, Dsquared2 and Kate Spade.

Ms Ooi Huey Tyng, senior vice-president and head, cards and unsecured loans, at DBS Bank, said that tiered rewards are a way of showing its appreciation of loyal customers, as well as catering to their lifestyle and preferences.

'For instance, the DBS Black Card extends accelerated rewards to card holders using the card at their favourite luxury brands,' she said.

Besides such ad hoc promotions, credit card customers benefit from earning rewards points on a tiered system all year round. For permanent rewards, the banks may choose to tie the required spending with certain merchants or a specified spending amount.

For instance, when the DBS Black Card promotion ends on Dec 31, customers will continue to earn four times the regular DBS points with the above retail partners. For all other spending, card holders will earn twice the regular DBS points all year round.

Standard Chartered Bank is believed to be the only bank here that structures its rewards programme based on the customer's total banking relationship and card spending. This means card members receive additional reward points for having a mortgage or fixed deposit with the bank. It does this for customers of its Standard Chartered Visa Infinite and Preferred World MasterCard.

Said its general manager for retail banking products in Singapore and Malaysia, Mr Dennis Khoo: 'Research showed that 60 per cent of consumers will switch more than 40 per cent of their existing spends from other credit cards to a card that rewards their loyalty and total relationship with a bank, as this will help them accumulate more reward points.'

lorna@sph.com.sg

http://sg.offerstation.com/offers-promot...t-card.htm >> Get $100 credit on your Standard Chartered Credit Card when you apply online. This is how they attract more ppl to sign up with them

[yeokiwi]

Last year, stand chart offers $200 by applying their credit card through orchard ion.

[d.o.g.]

Get $100 credit on your Standard Chartered Credit Card when you apply online. This is how they attract more ppl to sign up with them

The thing that I always find puzzling is how, after PAYING money to acquire a customer, so many banks promptly do everything they can to then drive the customer AWAY. For example:

1. Annual Fees

Yes, I know you can call and ask for a waiver, but why inflict this misery on your customers when only the stupidest customers will pay? And stupid customers are not usually those who have the highest income and can thus sustain a high level of spending.

2. Customer Service

When was the last time you walked into a branch and got fast, efficient service WITHOUT a sales pitch? Yes, branches are expensive, but long queues are not the way to encourage people to use online banking. Long queues just frustrate people and encourage people to use OTHER banks.

3. Promotional Offers

I regularly get checks from the banks which are packaged as "free money" but will in fact draw down a line of credit. Ditto for balance transfers that will "save" me money - provided I have a balance to transfer, of course.

I find it insulting that, after determining that I'm (according to their advertisements) smart, capable, good-looking etc and earn enough money to qualify for a fancy credit card, the bank promptly decides that I'm too stupid to figure out how expensive their "promotional" offer really is.

---
Of course, I don't take any of these things personally, because I know that even when the bank says they are "neighbours first" and "bankers second" they don't actually mean it at all. It's all just marketing - they pretend to care about me, and I pretend to be loyal to them.

I know that to the bank I'm just a number, just like every other "valued" customer out there. So I don't get worked up about it - I just tear up and throw away all the promotional stuff they send me. But I just feel sad that so much money is being wasted on useless activities.

[brattzz]

"But I just feel sad that so much money is being wasted on useless activities."

Fair statement, i was wondering, how about a simple no-frill bank?
Put all these money-wasting activities into direct savings for the customers?

I only need a free saving account with ATM services, a free current account, a good fixed deposit rate and a free credit card.

: )

[Musicwhiz]

1. Annual Fees

Yes, I know you can call and ask for a waiver, but why inflict this misery on your customers when only the stupidest customers will pay? And stupid customers are not usually those who have the highest income and can thus sustain a high level of spending.

2. Customer Service

When was the last time you walked into a branch and got fast, efficient service WITHOUT a sales pitch? Yes, branches are expensive, but long queues are not the way to encourage people to use online banking. Long queues just frustrate people and encourage people to use OTHER banks.

3. Promotional Offers

I regularly get checks from the banks which are packaged as "free money" but will in fact draw down a line of credit. Ditto for balance transfers that will "save" me money - provided I have a balance to transfer, of course.

Hi d.o.g.,

Interesting observations and thanks for sharing your experiences! Maybe I can also comment on the above from my own experience and perspective.

(1) Annual Fees - I actually just stick to ONE credit card (UOB One) and thus ALL my credit card spending is just focused one card. I guess someone over at UOB knows this, because when it comes to the annual fee I automatically see it being charged AND waived in the same credit card statement, without me needing to call to "make a fuss". So at least one bank I know automatically does this (auto-waiving of annual fee), though I do not know the threshold of spending for them to do so. Still, it makes for a more fuss-free experience for me.

(2) Customer Service - Well to be honest I hardly ever physically walk into a bank branch because most of my banking is done online via Internet Banking (payment of bills, GIRO, Fund Transfer etc). But I do get the sense that there are always bankers standing outside the branches waiting to pounce on you with their "latest promotions". I guess it's all part of the sales pitch and banks must continually try to sell all their packaged products, be they loans or structured deposits.

(3) Promotional Offers - Truth be told, I get a ton of this in my mail every month too, and it includes everything from line of credit, balance transfers, to enticing you with "blank cheques" with your name pre-printed on it. I always read it with a grin, feel very amused, and immediately dump it into the nearest bin. As you said, waste of paper for folks like you and me, but perhaps there are indeed many gullible (or desperate?) people who need such services. The high interest rates are not a deterrant for those who either do not understand about interest rates, or are too desperate to care. For me, I don't maintain a balance on my card; and I only have ONE card, so it makes no sense to use any of their hair-brained services which charge exorbitant interest rates of 18%-24% per annum.

I guess when it boils down to it, banks are merely companies keen on making more profits; we are just the customers who help them to do so. While one can view it as "exploitation" of the ignorant or gullible, I believe in life there's no free lunch. Either educate yourself, or suffer the consequences of your ignorance. Some people learn that the hard way; some learn from other peoples' mistakes. I'd rather be the latter.

[Ben]

I am using this threat to start a slightly different subject and I would like to hear your opinion on this matter. It is about the unsecured short term loan that bank frequently offer to their customers. Recently, HXXX bank offered a 1.99% p.a. loan for six months, with no upfront admin fees. After six months, the interest will revert back to 24% p.a. What is your view if one take up such a loan and invest in shares for 6 months? (Yes, I know many will be screaming NO! in their heart) Many SGX listed companies are giving dividends that yield more than 4%, and assuming (I know that is a big assumption) shares price remains the same, one would have make some gains.

I know it is a big no-no to borrow money to invest. However, lets say one already has the money in his/her bank account, but would like to leverage a bit by using other's people money to invest. If things really turned ugly, this person will be able to pay off the loan immediately and not roll over the loan and incur 24% interest payment.

Please share your views, thanks!

[d.o.g.]

It is about the unsecured short term loan that bank frequently offer to their customers. Recently, HXXX bank offered a 1.99% p.a. loan for six months, with no upfront admin fees. After six months, the interest will revert back to 24% p.a. What is your view if one take up such a loan and invest in shares for 6 months?

I actually played this game for a while some years back - borrow from Bank A, then after 6 months borrow from Bank B to pay A, then Bank C to pay Bank B etc. On paper it was always cheap - borrowing at 2-3% p.a. so I could make a good return, on paper. Sometimes it was a credit line, other times it was a credit card balance transfer.

I soon found that although I did make some extra money this way, it wasn't worth it, for the following reasons:

1. I had to keep track of when the cheap interest period would expire and make sure the credit lines overlapped;

2. I always had to overpay slightly to pay off the old debt, creating a credit balance that was a hassle to retrieve;

3. The maximum loan was 2x my salary, which was small compared to the total amount I was investing.

I did this because I didn't want a margin call and knew that the amount I was borrowing was small enough that I could pay it off with my salary within 6 months. But because the loan amount was small it didn't produce enough extra money. So in the end I gave up.

If you are doing this for only 6 months I would consider it too risky. The interest cost is guaranteed but the investment profits are not. Even if you are a good investor you might have some bad luck for 6 months. If you juggle the bank credit lines for 2 years it might work out, but you'll have the same issues I did. Learn from my experience and don't waste your time.

If you are even remotely serious about investing you will quickly find that the amount you invest will soon be many times your salary, so any money you can borrow via a personal line of credit or credit card balance transfer is not meaningful at all.

[Ben]

If you are doing this for only 6 months I would consider it too risky. The interest cost is guaranteed but the investment profits are not. Even if you are a good investor you might have some bad luck for 6 months. If you juggle the bank credit lines for 2 years it might work out, but you'll have the same issues I did. Learn from my experience and don't waste your time.

Thanks d.o.g. for sharing your experience and views. Greatly appreciate that!

[Jon-san]

ANZ Switch card is perm free. not advertising for them or anything. haha