Before we move to the comparison, first we need to define the different scenarios for comparison. Based on this article from Straits Times, we will take the median gross salary to be $3,300. We take 3 different people with different monthly credit card expenditure and savings into consideration:
Mr. A
|
Mr. B
|
Mr. C
|
|
Salary Credited
|
$2,640
|
$2,640
|
$2,640
|
Monthly CC Spend
|
$300
|
$600
|
$600
|
Savings
|
$20,000
|
$20,000
|
$40,000
|
*Assumption is made that every person can meet 3 bill payments every month
OCBC 360
Taken from OCBC website on 27 May 2017
OCBC 360 account gives a generous 1.2% interest by just crediting your salary (>$2,000). Also, the payment of 3 bills per month can be easily achieved as well (credit card bills, telecom etc). Personally I have trouble meeting the spending requirement of $500 on my credit card and I don't like having to buy an eligible financial product for the additional 1.2%. As graduates starting on our first jobs, we forgo the bonus 1% interest (for account balances >$200,000).
Based on OCBC 360 criteria, the 3 different people would earn the following interest per year:
Mr. A
|
Mr. B
|
Mr. C
|
|
Percentage
|
1.55%
|
1.85%
|
1.85%
|
Amount
|
$310
|
$370
|
$740
|
UOB One Account
Taken from UOB website on 27 May 2017
UOB One Account has a tiered system when it comes to their interest calculation. You only need to spend $500 on your UOB credit card and credit your salary (>$2,000), or pay 3 bills monthly via GIRO. However, if your balance goes over $50,000, you only receive 0.05% for the difference in amount over $50,000.
Take note that the requirement to spend $500 every month is a deal-breaker. If you do not meet the spending of $500 per month, you forfeit any interest you should receive.
Based on UOB One criteria, the 3 different people would earn the following interest per year:
Mr. A
|
Mr. B
|
Mr. C
|
|
Percentage
|
0.05%
|
1.75%
|
2.21%
|
Amount
|
$10
|
$350
|
$883
|
From the above calculations, it can be observed that the interest earned is maximized the closer your account balance is to the $50,000 threshold.
BOC SmartSaver
Bank of China SmartSaver is another very attractive account. Looking at the numbers advertised, you can earn interests up to 3.75%! However, like all advertisements that look too good to be true, we need to delve deeper for a better understanding.
Card Spend Bonus Interest:
Salary Crediting Bonus Interest:
Payment Bonus Interest:
Enjoy 0.35% p.a. Payment bonus interest when you successfully complete 3 bill payments of at least S$30 each via GIRO or BOC Internet Banking/BOC Mobile Banking Bill Payment function.
Extra Savings Bonus Interest:
Enjoy 0.60% p.a. Extra bonus interest when you have fulfilled at least one of the requirements for either Card Spend, Salary Crediting or Payment bonus interest. Payment bonus is applicable to your account balance above S$60,000 subject to a maximum of S$1,000,000.
As you can see, realistically, it is hard to achieve the 3.75% interest as advertised. So how much can our four people earn? Based on BOC SmartSaver criteria, the 3 different people would earn the following interest per year:
Mr. A
|
Mr. B
|
Mr. C
|
|
Percentage
|
1.15%
|
1.95%
|
1.95%
|
Amount
|
$230
|
$390
|
$780
|
POSB Cashback Bonus
POSB Cashback Bonus is extremely unique. Unlike the previous accounts, POSB gives users bonus interests based on the banking that they do. Take note that your salary credit must be at least $2,500 per month. Also, you are required to meet 3 out of the 5 above categories to be entitled to the cashback.
The drawback of POSB's Cashback Bonus is that you need to have 1 out of the 3 products offered by POSB - home loan, insurance or investments. As mentioned earlier when reviewing the OCBC 360 account, I don't like having to buy an eligible financial product (or take up a home loan) just to receive bonus cashback.
In this special case, a salary credit, credit card spend, and an insurance premium of $50 would earn the 3 different people the following cashback per year:
Mr. A
|
Mr. B
|
Mr. C
|
|
Percentage
|
0.64%
|
0.68%
|
0.34%
|
Amount
|
$127.44
|
$134.64
|
$134.64
|
POSB Cashback Bonus is highly dependent on the amount of transactions you carry out. Looking at the cashback received, your account balance is not a factor. I would highly recommend the POSB Cashback Bonus only if you take a home loan with POSB/DBS or you have multiple financial products from them.
CIMB FastSaver Account
CIMB had a simple approach to their FastSaver Account - maintain a minimum of $1,000 in your account and enjoy an interest rate of 1%. There is really nothing much to say about this account. What you see advertised is what you get. Unlike the accounts mentioned above, there is no requirements for salary credit, bill payments, credit card spending or purchase of any financial products. However, when comparing CIMB's interest rates with its competitors, you got to admit that it is a little low (*hints CIMB)
Based on the advertised interest rates, the 3 different people would earn the following interest per year:
Mr. A
|
Mr. B
|
Mr. C
|
|
Percentage
|
1%
|
1%
|
1%
|
Amount
|
$200
|
$200
|
$400
|
Conclusion
Based off the financials of a graduate entering the working industry, we can conclude:
1) OCBC 360 Account is for you if you are unable to meet minimum credit card spending of $500/month.
2) BOC SmartSaver Account is for you if you can meet meet minimum credit card spending of $500/moth and you account balance is less than $35,000.
3) UOB One Account is for you if you if you can meet meet minimum credit card spending of $500/moth and you account balance is more than $35,000.
You always do a great job of explaining things. I can definitely see where you're coming from and I appreciate the insight.
ReplyDeleteI shared this on Facebook and my friends seemed to
enjoy it too. Keep it up!
Thanks! I just started out writing, and it is really motivating to receive such a compliment!
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