UOB recently announced significant changes to UOB EVOL’s cashback structure, which may not be welcomed news despite the bank's use of terms like "enhanced." These changes include a substantial reduction in the effective cashback rate, dropping from approximately 6.7% to around 3.75%.
These modifications will take immediate effect for new cardholders who receive their cards issued from June 7, 2024, onwards. Existing cardholders will experience these changes for statements generated from August 7, 2024, onwards.
New Cashback Mechanics
The updated cashback mechanics revolve around two primary categories:
Online Spend and Mobile Contactless Spend
Overseas In-store FX Spend
The minimum spend threshold has been raised to S$800 (from S$600), and here are the sub-limits for each category:
10% cashback on Online Spend and Mobile Contactless Spend, capped at S$30
10% cashback on Overseas in-store foreign currency spend, capped at S$20
0.3% cashback on all Other Spend, capped at S$30
The Impact on Effective Yield
The recent changes have a significant impact on the effective yield of UOB EVOL. The consolidation of online spend and mobile contactless spend into a single category with a sub-limit of S$30 means that reaching the maximum for this category requires just S$300 in spending, leaving another S$500 to meet the S$800 minimum spend requirement.
Despite the marketing claim of "10% cashback," relying solely on online and mobile contactless spend for the minimum spend yields only S$30, resulting in an effective cashback rate of 3.75% on S$800 of spending.
To improve the overall effective cashback, after reaching the S$300 limit in the online and mobile contactless spend category, consider using the physical card at retail stores for the remaining S$500 to earn 0.3% cashback in the Other Spend category. This strategy raises the effective cashback to 3.93%, or S$31.50 on S$800 of spend.
Overseas in-store foreign currency spending requires physical transactions abroad. However, this may not be feasible monthly, especially since online foreign currency spending is not included. Even if both the online/contactless and overseas spend categories are maximized, the cashback is only S$50 on S$800 spend, amounting to 6.25%.
Immediate Impact on New Cardholders; Existing Cardholders Have a Limited Grace Period
New cardholders applying before the announcement may find the card they receive significantly different from what they expected, with the changes taking effect immediately for new cards issued from now onwards. Existing cardholders will experience the new mechanics in statements generated on or after 7th August, allowing one more statement cycle under the old rules.
Exploring Alternatives
Considering alternatives, Maybank Family & Friends offers 8% cashback across multiple categories, while UOB One is a viable replacement, particularly for UOB One account holders seeking interest benefits.
Although UOB EVOL's convenience for online and mobile contactless spending made it popular, viable replacements are scarce. The landscape has changed, with OCBC FRANK and DBS LiveFresh facing similar nerfs in recent years.
Another option is to explore 4 miles per dollar cards like UOB Preferred Platinum Visa, Citi Rewards (with Amaze), and HSBC Revolution. While 6.7% cashback may seem preferable, 4 miles per dollar can surpass a 3.75% cashback rate.
Potential Industry Implications
The nerf to UOB EVOL raises concerns about potential contagion effects leading to more nerfs in the cashback space. The weakening of cashback cards may prompt a shift towards miles cards, potentially causing devaluations and nerfs in the miles rewards sector as well.
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