UNITED Overseas Bank said on Thursday that its new current account product does work for those who want to earn airmiles as they spend and save.
The bank was defending its KrisFlyer UOB account launched on Tuesday after blogger Aaron Wong trashed it, saying among other things that no interest is earned on the account and that the 5 per cent bonus cap makes the "effective miles per dollar lower the more you spend".
In his post, "The KrisFlyer UOB account is dead on arrival", Mr Wong also did not like the fact that the bonus miles are for a promotional period of only 12 months.
While UOB did not dispute the calculations in the post, it said that the KrisFlyer UOB Account combines a debit card and current account to award air miles, designed for millennials and frequent flyers, based on the insight it has into their lifestyle, spending and savings choices.
"Our consumer insight tells us that this account, which has an accelerated earn-rate for KrisFlyer miles, will be attractive to those who would rather have free flights instead of earning interest," said a UOB spokeswoman.
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If a KrisFlyer UOB account is opened with at least S$3,000, the customer would also be able to earn bonus KrisFlyer miles. Those who may not be eligible for a credit card but still want to be rewarded with frequent flyer miles for their spending can now do so with the KrisFlyer UOB account.
"On the first day alone, hundreds of KrisFlyer UOB accounts were opened and more than S$4 million deposited with us," she said.
With the KrisFlyer UOB account, customers with a monthly average balance of S$20,000 and a monthly spend of S$1,000 would, over one year, be able to earn the equivalent of a return trip to Bali on Singapore Airlines, she said.
Wealthier customers who like to travel business class, with a monthly average balance of S$350,000 and a monthly spend of S$2,500 for 12 months, would earn 162,000 KrisFlyer miles in 12 months which can be redeemed for two return business class tickets to Beijing on SIA (worth about S$5,700 on the airline's cheapest business saver tier).
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A bigger spender of S$3,000 a month for 12 months and monthly average balance of S$350,000 would earn 194,400 KrisFlyer miles in 12 months which can be redeemed for one return business class ticket to New York on SIA (worth about S$6,200 on business saver).
Or if they want to earn interest, they could put the S$350,000 in a 13-month fixed deposit at 1.15 per cent which would net them S$4,025, said UOB.
"For a customer who prefers to earn interest over air miles, we would recommend they deposit their money into a fixed deposit or savings account to earn interest at the prevailing market rates," the spokeswoman said.
She added that the bank's calculations are based on realistic scenarios of average monthly spend of between S$2,500 and S$3,000 on a debit card for customers with monthly average balance of S$350,000.
On the 12-month promotional period, she said that "this just means that we will review it then to make sure that we continue to have a competitive product with competitive miles earn rate for our customers. It does not mean that the bonus miles will end after next year."
This article was first published on Apr 21, 2017.
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