We consistently monitor the bank card house in Singapore and have been amassing information on bank cards and their rewards. For this particular examine, we sampled 51 of the preferred bank cards from the entire main card issuers and in contrast their present rewards program in 2017 to what they have been in 2016.
To calculate how a lot worth a card can generate for a median client, we created a hypothetical client whose spending behavior is much like the Singaporean common in response to the federal government’s expenditure survey. By modelling every card with this hypothetical individual, we have been capable of calculate the worth of rewards (i.e. cashback and air miles) that one might earn over 2 and three years, whereas additionally adjusting for the influence of annual charges.
Of be aware, we’ve excluded some one-off and promotional perks like x% off at a choose variety of eating places or outlets, and many others functions of evaluating direct advantages of every bank cards. As these advantages are consistently altering and could be usually too complicated for shoppers to make use of, we deemed them to be much less influential in a bank card person’s economics. We additionally solely thought of a card to have modified if its greenback worth (when it comes to money rebate and air miles an individual can earn over 2-3 years) elevated or decreased by at the very least S$100.
Key Findings: Credit score Card Rewards Are Declining
For a median client with a month-to-month expenditure of S$2,000, we discovered that 2-year greenback worth of playing cards has declined by about S$34 on common. 3-Yr greenback values have declined by about S$55 on common. These figures really under-represent the magnitude of this development that we’ve observed.
As an illustration, some banks have launched welcome bonus promotions that quickly improve these common figures. When most of those applications expire on the finish of February and March, the typical decline will improve meaningfully, particularly for 3-year or longer time frames the place these “one-time” boosts begin to matter a lot much less.
|Avg 2-Yr Greenback Worth||S$1,373||S$1,339||-2.5%|
|Avg 3-Yr Greenback Worth||S$1,951||S$1,897||-2.8%|
Largely, we’ve been noticing some playing cards had modified their set of rewards over the previous few months, whereas some have additionally raised their annual charges. In whole, we discovered that 7 bank cards out of 51 (or 14%) grew to become considerably worse for shoppers, whereas just one grew to become meaningfully higher. Let’s focus on every consider element one after the other.
|2016 2-Yr Worth||2017 2-Yr Worth||Change||2016 3-Yr Worth||2017 3-Yr Worth||Change|
|UOB One Card||2,322||2,257||(64)||3,393||3,265||(128)|
|OCBC Titanium Card||1,747||1,653||(94)||2,428||2,287||(141)|
|OCBC Robinsons Group Credit score Card||2,420||2,227||(193)||3,533||3,340||(193)|
|HSBC Visa Platinum Credit score Card||1,604||1,339||(265)||1,991||1,726||(265)|
|HSBC Revolution Credit score Card||2,255||1,990||(265)||2,999||2,734||(265)|
|ANZ Platinum Card||1,757||1,356||(401)||2,555||1,870||(685)|
|ANZ Swap Platnium Card||1,917||1,476||(441)||2,875||2,129||(746)|
|POSB On a regular basis Card||2,892||2,236||(656)||4,224||3,210||(1,014)|
|Maybank Horizon Visa Signature Card||651||815||164||937||1,183||246|
Change in Reward Program
About 8% of the 51 bank cards we sampled in Singapore have decreased their rewards charges by a big quantity in comparison with 2016. These playing cards have been: OCBC Titanium, ANZ Platinum Visa Card, ANZ Swap Platinum Card and POSB On a regular basis Card. By both altering the rewards charge or altering reward classes, they ended up offering much less when it comes to both air miles or money rebate to the cardboard holder.
|Abstract of Change||2016||2017||2-Yr Greenback Worth 2016||2-Yr Greenback Worth 2017|
|OCBC Titanium Card||
|ANZ Platinum Card||
|ANZ Swap Platinum Card||
|POSB On a regular basis Card||
As an illustration, the POSB On a regular basis card deprived its customers by shifting advantages from a excessive spending class to a low spending class. Beforehand, the POSB On a regular basis card provided as much as 9% of cashback for eating bills, however now decreased this rebate charge to 0.3% whereas shifting the advantages to abroad spending, which elevated from 0.3% to five%. Whereas this variation could appear “honest” on the floor, that is much less helpful to the typical client who would solely journey a few times a 12 months.
Equally, OCBC Titanium card fully modified its set of rewards to concentrate on buying. By providing 4 miles per S$1 spent on buying, it seeks to attraction to energetic customers. Nonetheless, that is additionally disadvantageous to the typical client as a result of all one other spending solely earns 0.4 miles, whereas it used to earn 1 mile per S$1 earlier than the cardboard’s rebranding. Two ANZ playing cards talked about above had a comparatively easier change, as they eliminated the 2-20x rewards level buff for classes like petrol, journey, leisure and groceries.
Annual Charge Enhance
When it comes to annual charges, we noticed a complete of three playing cards that elevated the price of utilizing them for the patron. Two playing cards did this by immediately growing the annual payment quantity: UOB OneCard and OCBC Plus! Visa bank card. UOB One card, which returns as much as 5% of flat charge money again on each greenback you spend, used to cost solely S$128.4 of an annual payment, which was waived for the first 12 months.
Whereas the waiver nonetheless exists, now the annual payment elevated to S$192.6, a whopping 50% improve. OCBC Plus! Card elevated its payment from S$80 to S$107. One remaining card, OCBC Robinson Card, simply removed their payment waiver applications, which successfully will increase the price of utilizing this card by S$192.6 over 2 to three years. Excessive annual charges offset the good thing about their rewards applications in a significant means and should encourage some shoppers to alter to a unique card.
Moreover these, a number of playing cards have additionally elevated the minimal necessities for qualifying for annual payment waivers, like OCBC’s Frank and 365 playing cards. Nonetheless, their necessities are nonetheless comparatively lenient as they solely require one to spend S$10,000 on the cardboard per 12 months.
Playing cards That Improved
There was one card that improved in a big means in Singapore: Maybank Horizon card. Beforehand named Maybank Horizon Platinum Visa Card, it was rebranded right into a significantly better Maybank Horizon Signature Visa card. That is the way it modified. In 2016, Maybank Horizon card used to offer 2 miles for S$1 spent on petrol, journey, buying and utility-related bills, with 0.4 miles awarded for S$1 spent on all the pieces else.
Now, it awards 3.2 miles for S$1 spent on petrol and eating, and one other 2 to three.2 miles for travel-related bills. For all different bills, it nonetheless supplies 0.4 miles per S$1. Whereas they raised the annual payment from S$150 to S$180, they nonetheless waive this annual payment so long as you spend S$18,000 per 12 months (beforehand S$12,000 per 12 months), that means you solely need to spend S$1,500 on the cardboard monthly. Total, we expect this card improved in greenback worth by S$164 over 2 years.
Another playing cards additionally improved, however in a lot much less important methods. As an illustration, DBS is offering S$160 money rebate for brand spanking new clients till 31 March 2017, up from S$100 rebate they used to present in 2016. UOB is working an analogous program of S$50 rebate for brand spanking new clients till 31 March 2017.
Nonetheless, these “bonuses” are simply up-front incentives which have much less influence on the long-term utility of a bank card. Not solely that, within the occasion that banks roll again these incentives, their playing cards may have no enchancment over their choices from 2016.
From an analyst viewpoint, it is a basic means of controlling price. Historically, the banking enterprise fashions have at all times been about controlling prices & gaining scale as a result of their merchandise are comparatively much less differentiated than different client merchandise like style items. In truth, there was a development in direction of price discount for banks in Singapore these days.
Based on Straits Instances, Citibank simply raised the minimal whole relationship steadiness for patrons. Servicing an account has quite a lot of price gadgets related to it, like customer support, compliance, authorized, and many others. If a buyer’s account is simply too small, it may not be value a financial institution’s time to service it.
That’s why they’re elevating each the account service payment (from S$10 to S$15) and the minimal whole relationship steadiness wanted to get the account service payment waiver (web page 4 of this doc). There was an analogous growth within the US after Dodd-Frank elevated compliance price for banks, and banks needed to elevate the minimal steadiness.
A attainable cause for these strikes is that banks are both feeling margin pressures or are feeling safer about their aggressive atmosphere. What we do know is that we’ve additionally been noticing some decline in client advantages on bank cards in Singapore in the previous few months, i.e. larger annual charges for major or secondary holders, rising APRs charged on playing cards, and declining total advantages in types of money again, air miles or welcome bonuses.