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Thursday, April 30, 2015

OCBC360 - It Just Got Better

Did the OCBC360 Account "Just Got Better" or are there really better savings account alternatives out there to maximise your interest returns. Lets take a look at whats new, come 1st May.


The current OCBC360 terms:



Lets take a look at the new criterias come 01-MAY-2015:

Lets discuss the criterias from the left-to-right. To prevent confusion, we will number them 1 to 5.


New Terms


1) 1.2% Per Year 

Credit your salary of at least S$2,000 through GIRO

How to earn the bonus interest:

- Credit your salary of at least S$2,000 per month.

- You will receive this bonus interest by the 7th business day (exclude Saturday, Sunday and Public Holiday) of the following month.

- Only salary credit with the transaction description "GIRO-SALARY" will qualify for this bonus.

Our take:

Previously: 1.0% Per Year

There was an upward revision of the interest by 0.2% per year. This is great news for everyone, as this criteria is probably the easiest to meet.

2) 0.5% Per Year

Pay any 3 bills online or through GIRO

How to earn the bonus interest:
- Make 3 unique bill payments from this account with OCBC Online Banking using Pay Any Bill and Pay Any Card services or through GIRO.

- Multiple payments to the same bill within the calendar month will be considered as a single payment.

- You will receive this bonus interest by the 7th business day (excluding Saturday, Sunday and Public Holiday) of the following month.

Our take:

Previously: 1.0% Per Year

This criteria has seen its interest amount reduced from 1% to 0.5%. 

An additional option of Giro payments, has been added to make it easier to qualify for this bonus interest. However, the huge reduction will significantly affect the final bonus interest amount.

3) 0.5% Per Year

Spend at least S$500 on OCBC Credit Cards

How to earn the bonus interest:
- Spend at least S$500 in total across your personal OCBC Credit Cards such as 365, Titanium, Platinum, FRANK, Robinsons, Plus! and Best Denki.

- You will receive this bonus interest by the 7th business day (exclude Saturday, Sunday and Public Holiday) of the following month.

Our take:

Previously: 1.0% Per Year

Similar to criteria 2, the bonus interest amount is reduced from 1% to 0.5%. 

Also, it is worthwhile to note that the minimum spend criteria has been increased from SGD$400 to SGD$500, making it slightly more difficult to reach this criteria - especially for account holders who rarely use OCBC credit cards.

4) 1% per year

Insure or invest and get this bonus for 12 months

How to earn the bonus interest: 
- Purchase any eligible financial product of at least the minimum amount, such as Endowment of at least S$8,000 in annual premium, or investment products such as Unit Trust or Structured Deposits of at least S$40,000.

- If you make multiple purchases of eligible financial products within the same month, we will only combine purchases of the same product type which have passed 14 days after the product’s effective date. Effective date refers to the inception date of the insurance plan, trade date of unit trust, deposit start date of structured deposit and transaction date for other investment products.

- This bonus interest is paid for 12 months after the free cancellation period or 14 days, whichever is longer.

Our take:

This is a new component of the OCBC360.

We feel that this additional 1% would not be easy to achieve unless the account holder is interested to purchase a financial product from OCBC. Moreover, do note the minimum amount of the investment required to qualify for this bonus interest.

5) 1% per year

Increase your account balance from the previous month’s balance

How to earn the bonus interest:

- Incremental account balance is the difference between current and previous month’s account balance.

- This bonus interest will be paid on incremental account balance of up to S$1,000,000.

- You will receive this bonus interest by the 7th business day (excluding Saturday, Sunday and Public Holiday) of the following month.

Our take:


This is a brand new component of the OCBC360. Allowing account holders to earn an additional 1% on incremental balances. This means that the additional 1% will be credited on your incremental balance. (Eg: $5000 x 1/100 x 31/365)

Illustration below:

MonthBalanceIncremental BalanceBonus Interest earned on eligible Incremental Balance
Nov-14S$60,000S$0.00
Dec-14S$65,000S$5000S$4.25

This works similar in effect to the OCBC Bonus+ Savings Account

We feel that the additional 1% is great only if one has a consistent stream of additional income or savings. Otherwise, the 1% bonus on the month-on-month incremental balances would not give substantial return.

We do see an opportunity of moving funds on alternate months to leverage on this additional 1% - similar to our Supercharge your savings article. But it remains to be seen if it will work with the OCBC360.

Unchanged Terms


Lastly, on top of the bonus interest, you will still continue to earn a base interest of 0.05% per year on your entire account balance.

Summary


The new OCBC 360 conditions sure gives us a lot to consider. Besides revising some bonus interest downwards, they have introduced two new components. and revised certain criterias.

All else equal, if you had managed to meet the previous criteria and achieved 3.05%, you will now only qualify for an effective interest of 2.25%. If you manage to meet criteria 4 (Insure or Invest) and criteria 5 (Incremental Balance). 

You will probably enjoy more interest returns from the latest changes to the OCBC360 Savings Account - to the tune of > 3.25% in EIR. This is pretty good considering that the CPF (Supposedly Risk Free) returns is at 2.5% for your ordinary account.

However, if you are like me, unable to meet some of these criterias, why not take a look at the latest UOB One Account - which provides an EIR of 2.43%. Not too shabby for a savings account.