Citibank has unveiled Citibank PayAll this week, an option for you to pay large peer-to-peer expenses such as rent and tuition fees from your credit card, allowing you to earn miles or points from the payments.
There is a service fee for each payment, but you will also earn 1.2 miles per dollar spent on the Citi PremierMiles card. If you hold other Citibank credit cards that earn miles,
Other Citibank cards that earn miles include the Citi Prestige and the Citi Ultima Card, earning you 1.3 and 1.6 mile respectively per dollar paid via PayAll.
If you do not hold any of the above, you may also earn Citi reward points if you use the facility off the following cards:
- Citi Classic
- Citi Clear Platinum
- Citi Gold
- Citi Platinum
- Citi Rewards
For the cards above, you will earn 1 reward point per dollar spent. This is not great, considering you can convert these points to 0.4 mile per point.
The service fee ranges from S$24 to S$120, depending on how much you are paying each month. Based on some experimentation there seem to be three levels:
- $1 to $2,000 – $24 fee
- $2,001 to $5,000 – $60 fee
- $5,001 to $10,000 – $120 fee
This means that you will get the best value if you are making payments of $2,000, $5,000 or $10,000 per month, as this returns the minimum fee of 1.2%.
How to use?
To be eligible to use the service, you must first have received the promotion email from Citibank. There’s a customised link in that email that will allow you to set up the payment instruction.
Once you click in, you will be shown a screen with the promotion mechanics: your monthly payment giving you how many bonus miles or reward points, depending on which card you hold.
If you will like to proceed, click on “Start Using PayAll”.
In the next screen, fill out the payee details, as well as the monthly payment sum, the payment date each month as well as the last payment date.
Note that you can only make monthly payments at the moment, up to a maximum of 24 months. There’s no other frequency offered at the moment.
After that, you will choose which card you want to use the service from, and the amount of miles or points you will receive each month.
The fine print
Obviously, Citibank isn’t going to let you have all those rewards without a fee.
Typically, under a normal merchant-customer payment flow, the bank will levy a service fee on the merchant, which will in turn funds the rewards (or miles) you get from using that card.
For Citibank’s PayAll service, there is a 1.2% service fee on the quantum, subject to a minimum of S$24. This is not explicit in its terms of service, but instead, you will arrive at this amount by playing around with the monthly payment sum.
That means, at a minimum of S$2000 per month, you will get 2,400 miles with a processing fee of S$24. Effectively you will be paying 1 cent per mile under this arrangement, which isn’t too bad. However, this will only be Citi Miles – you will need to pay a conversion fee of S$25 to convert these Citi Miles to your frequent flyer programme.
To fully maximise this promotion, you can pay up to S$10,000 per month, to get 10,000 miles at a S$100 fee. Run this payment for two years, and you will get 240,000 miles for S$2,400. Factor in a conversion fee of S$25, you effectively pay 1.01 cent per mile.
But of course, not everyone will have a $10,000 credit limit to tap on, and PayAll limits the utilisation at S$10,000 or 95% of your credit limit, whichever is lower.
This is a worthy promotion, given that you are effectively buying miles at 1 cent a piece. But of course, there’s no terms confirming that you can, or cannot, name yourself as a payee.
For those who are savvy, banks usually charge you a processing fee for any cash advances (think equal payment plans for large purchases) and not give you any rewards for these spending, so this is a good step forward.