Rewards and points programmes instead of interests

In ancient Babylon, banks began paying interest on deposits. Two thousand years later, Standard Chartered has come up with an alternative. Any of the bank’s Hong Kong depositors with enough cash in their accounts can forgo interest payments and accept instead rewards from Asia Miles, the loyalty programme owned by Cathay Pacific… While it is common for banks to hand out perks to credit card customers, there is a growing trend for rewards and points programmes in other parts of retail banking… For StanChart’s account, the distinguishing feature is that the air miles on offer are potentially more lucrative than the amount of interest depositors would otherwise earn. For instance, a customer depositing HK$1 million of new funds receives 230,000 Asia Miles… almost enough to redeem two return business class flights from Hong Kong to London with Cathay. The cash value of the same two flights is roughly HK$80,000, excluding taxes and fees, whereas putting the equivalent amount of money into an interest rate-bearing account with StanChart would generate about HK$20,000 a year… The bank can offer such a generous chunk of Asia Miles because it buys them in bulk at a discount from Cathay, which, in turn, knows that many customers will fail to redeem the rewards before a three-year expiry deadline.
 
David Crow and Robert Armstrong

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