TAKING to the skies just got more pleasurable after an outburst of fierce competition among banks offering credit cards - charging to your card can now mean free air tickets and more.
The banks have been jostling each other to offer the most lucrative travel benefits to their Singaporean card holders - who are flying abroad in ever-greater numbers.
Such schemes are hardly new. A credit card holder gets points or miles based on the amount he spends using the card. These points can then be converted into perks such as free air tickets.
What is new is the ferocity of the battle among banks for this vital portion of the credit card market.
It is easy to understand why banks are keener than ever on this customer segment. More Singaporeans are travelling, for both leisure and business, and spending more while overseas.
The number of people travelling overseas has gone up 15 to 20 per cent since last year, said Mr Raymond Ang, the regional managing director and head of DBS cards and unsecured loans.
Last year, Singaporean Visa card holders spent $2.08 billion overseas on their Visa cards, up 10 per cent from the previous year, according to Visa data.
A hefty 62 per cent of this overseas spending was generated within the Asia-Pacific, but an increase was also recorded in the amounts spent by card holders for longer-haul destinations such as the United States or Europe.
Other figures show that, for every $100 charged to a credit card, up to $20 is generated from overseas spending.
Frequent traveller Peter Lau, 39, who owns five credit cards, said he is constantly on the lookout for promotions that will get him greater mileage out of his credit card spending.
'The promos are for a fixed period of time and, during that timeframe, I ensure that I use that particular credit card more aggressively to chalk up more miles.
'So far, I've used my miles to redeem air tickets to Australia, New Zealand and the US,' said Mr Lau. As a senior marketing manager with a multinational corporation, he flies twice monthly for business.
The choices are good, but the continuous spate of promotions offering an array of benefits means that consumers must read the fine print and make careful comparisons before deciding which card is the most suitable for them.
DBS Altitude Card
THE travel card battle can be traced back to early July, when DBS Bank launched its Altitude Amex card, which boasts the 'best air mile conversion rate' of 83 cents for one KrisFlyer mile, or $1 for 1.2 KrisFlyer miles.
Of course, the more attractive the conversion rate, the higher the card's value, as it means that card holders earn miles faster.
The DBS move upped the ante in the travel card market at the time, as rival cards were only offering benefits ranging from $2.50 for one mile to $1 for 0.4 mile to one mile in normal transactions.
To drive more sales, DBS recently offered a promotional conversion rate of 50 cents for one mile for overseas card transactions. This drive will end in February next year.
Citibank PremierMiles Visa Card
HOT on the heels of the DBS launch, US bank Citibank last month introduced its PremierMiles Visa card, which offers a similar conversion rate of 83 cents for one Citi Mile.
Customers also get extra miles on their first transaction, as well as up to 20,000 annual bonus miles if they spend at least $50,000 a year. If a consumer spends less than $50,000 a year, an annual bonus of 10,000 miles will be awarded.
What this means is that, depending on the bonus miles accumulated and annual card expenditure, card holders can enjoy a more attractive conversion rate ranging from 45 cents to 65 cents for one mile. Each reward mile is typically equivalent to one mile in the frequent flier programme.
Citibank customers who charge $50,000 within one year earn enough miles to get a free round-trip air ticket to New York.
An extra feature is that any overseas travel-related expenses, such as hotel stays and shopping sprees, which also attract Citi Miles, can be redeemed with accrued Citi Miles provided the card holder calls the bank within 60 days.
In other words, you can start to earn your next free air ticket even as you relax on your holiday.
Amex KrisFlyer Gold and UOB Visa Signature Cards
NOT to be left out, both Amex and United Overseas Bank (UOB) offered their own promotions soon after, on their existing KrisFlyer Gold card and UOB Visa Signature card, respectively. The promotions translated into conversion rates of 57 cents for one mile for the Amex card, and 83 cents for one mile for the UOB card.
But there are catches. Both banks require the card holder to spend a minimum sum before he can qualify for the attractive conversion rates, and both promotions apply only until Dec 31.
Outside these campaigns, the Amex KrisFlyer was offering a conversion rate of $1.60 for one mile while UOB Signature's rate was $1.25.
Other factors
BESIDES the air mile conversion rates, it pays to be aware of factors such as terms and conditions when redeeming your miles. Also, card issuers try to stand out from the crowd by offering other non-mile privileges.
Is the conversion rate a permanent feature?
Check if the conversion rate is a long-term feature or for a specified promotional period only.
It is usually more attractive if the rate is a permanent feature and applies to all transactions. This eliminates the need to keep track of campaign deadlines.
Does the conversion rate apply only to certain transactions?
Also, check if the rate is meant only for certain transactions such as overseas spending or expenditure at specific retail outlets.
Do conversion charges apply?
The Amex KrisFlyer Gold card automatically transfers the earned miles to the card member's KrisFlyer account every month.
However, this is not an automatic feature with every travel card, particularly ones that are tied up with numerous frequent flier programmes.
Watch out for any additional charges involved in converting reward points to miles. The additional conversion process also takes time.
What are the frequent flier tie-ups?
If you prefer a specific carrier, then pick the card that the carrier is partnering. Otherwise, note that most travel cards are tied up with frequent flier programmes such as KrisFlyer, Air Miles and Royal Orchid Plus, where the options are wider.
In the case of the UOB Visa Signature card, card members can also choose to redeem travel vouchers that can be used for travel redemption with UOB Travel Planners and the travel portal Zuji.
Do your miles expire?
Check if there is an expiry date imposed on your miles, and whether there is a requirement to transfer miles in fixed amounts.
Non-air privileges
Depending on the card, members can choose to redeem shopping and dining vouchers using their reward points.
The UOB card is also offering one-for-one Northwest Airlines economy tickets to certain destinations such as San Francisco at $1,700 or Tokyo/Nagoya at $888.
Market outlook
BANKS in Singapore believe the demand for travel cards will continue to grow as more and more Singaporeans achieve greater spending power.
Said Ms Gan Ai Im, UOB's head of cards and payment products: 'Research has shown that this growing mass-affluent group has a greater propensity to indulge in leisure travel and choose more distant destinations for holidays.'
The good news, noted DBS' Mr Ang, is that the pool of discerning travellers is growing, with more of them now willing to part with their money to enjoy better-quality trips.
'Statistics show that Asia is experiencing a boom in premium air travel: Intra-Asia and Asia-Europe routes now account for about 10 per cent and 8 per cent of global international premium traffic, respectively,' he added.
