Competition spurs people to do better. It’s that spirit of comparing ourselves against others that drives us to put our best foot forward. Customers love it when businesses compete for our attention, because that often means that we benefit. Yet in a market that is teeming with savings accounts that are rewarding you with bonus interest, we can’t help but wonder why the OCBC 360 account has changed their T&Cs again – and not necessarily for the better.
Here’s a quick summary of the change to the OCBC 360 account
When the changes kick in 1 April 2017, the maximum interest rate you can earn will go from 3.25% per year to 3.05% per year. The amount of bonus interest you can earn from paying bills and credit card spending have also been reduced to 0.3% each. However, there have been improvements to the “Wealth Bonus”, which involves getting insurance or investments through OCBC. You will now be able to earn more bonus interest this way. Most importantly, bonus interest can now be earned on the first $70,000 in your account balance, up from $60,000 previously.
But how does the OCBC 360 account stack up against the competition?
If you were to look solely at the maximum bonus interest, and the account balance cap to earn bonus interest, the changes to the OCBC 360 account have not affected where they stand compared to other similar products in the market. Comparing solely in terms of maximum bonus interest, they’re still third place in the market
| Maximum Bonus Interest | Account Balance Cap to earn Bonus Interest | |
| Standard Chartered Bonus$aver | 3.88% | $100,000 |
| BOC SmartSaver | 3.55% | $60,000 |
| OCBC 360 (from 1 April 2017) | 3.05% | $70,000 |
| DBS Multiplier | 2.68% | $50,000 |
| UOB One | 2.43% (effective) | $50,000 |
But of course, no one should be comparing maximum bonus interest. For one thing, the kind of hoops that you must jump through to earn that maximum bonus interest are different for each account. In fact, because of several factors, it’s not immediately obvious which is the best savings account. For example, if your take-home pay is less than $2,500, you won’t qualify for the salary credit bonus interest on the Standard Chartered Bonus$aver account, or the POSB Cashback Bonus.
So let’s illustrate three typical Singaporean scenarios and see which savings account earns the most interest for each scenario.
Scenario 1: Ms Lee, fresh graduate, $2,200 monthly take home pay
Let’s assume for simplicity’s sake – monthly credit card expenditure of $800, and the ability to pay at least $150 in bills monthly. Let’s also assume she has about $15,000 in her account, and does not have any insurance or investment with the bank.
| Salary Crediting | Credit Card Spend | Bill Payment | Total | |
| BOC SmartSaver | 0.80% | 0.80% | 0.35% | 1.95% + 0.275% (base interest) = 2.225% |
| OCBC 360 (from 1 April 2017) | 1.20% | 0.30% | 0.30% | 1.80% + 0.05% (base interest) = 1.85% |
| UOB One | Depends on account balance | Depends on account balance | Depends on account balance | 1.70% + 0.05% (base interest) = 1.75% |
| Standard Chartered Bonus$aver | 0.00% | 0.78% | 0.25% | 1.03% + 0.10% (base interest) = 1.13% |
| DBS Multiplier | Depends on total transaction amount | Depends on total transaction amount | Depends on total transaction amount | 0.05% (base interest) |
For Ms. Lee, the most interest she can earn is from the Bank of China SmartSaver account, followed closely by the revamped OCBC 360 account and the UOB One account. Now that the OCBC 360 has reduced the interest you can earn for these basic banking transactions, they’re giving UOB a chance to catch up.
But do take note that you can’t just look at how much interest you can earn – you also must consider the suite of services that the bank can offer. In many ways, local banks are superior to foreign banks. Even if it’s something many of us take for granted, like finding an ATM in an emergency, it’s easier to find an OCBC or UOB ATM, compared to a BOC ATM.
You also have to consider the opportunity cost of charging to a BOC credit card to qualify, compared to the OCBC or UOB suite of credit cards.
Scenario 2: Ms Rani, working adult, $3,500 monthly take home pay
Let’s assume monthly credit card expenditure of $1,200, and the ability to pay at least $150 in bills monthly. Let’s also assume she has about $50,000 in her account, and looks to invest $20,000 in unit trusts.
| Salary Crediting | Credit Card Spend | Bill Payment | Total | |
| OCBC 360 (from 1 April 2017) | 1.20% | 0.30% | 0.30% | 1.80% + 0.60% (wealth bonus) + 0.05% (base interest) = 2.45% |
| UOB One | Depends on account balance | Depends on account balance | Depends on account balance | 2.38% + 0.05% (base interest) = 2.43% |
| BOC SmartSaver | 0.80% | 0.80% | 0.35% | 1.95% + 0.40% (base interest) = 2.35% |
| Standard Chartered Bonus$aver | 1.00% | 0.78% | 0.25% | 2.03% + 0.10% (base interest) = 2.13% |
| DBS Multiplier | Depends on total transaction amount | Depends on total transaction amount | Depends on total transaction amount | 2.68% (for one month), 0.05% (for the rest of the year) |
There are several things happening here that need to be considered. Firstly, while the DBS Multiplier has the highest interest rate of the list, that interest rate only applies to the month where the $20,000 transaction in unit trusts was made. If Ms Rani were to spread out her investment evenly over 12 months? She wouldn’t qualify for the bonus interest under the DBS Multiplier.
This is where the new OCBC 360 account revamp comes into play – because Ms Rani makes a $20,000 purchase of unit trusts, she now qualifies for the lower tier Wealth Bonus of 0.60%, and this bonus interest rate is applied over 12 months. This means that the OCBC 360 account is the overall winner after a year.
However, it must be pointed out that Ms Rani would also qualify for the UOB One account’s maximum interest rate of 2.43% a year, even if she didn’t invest $20,000 in unit trusts. Again, OCBC’s revamp gives UOB a chance to catch up.
Scenario 3: Ms Yasmine, upper management, $7,500 monthly take home pay
Let’s assume monthly credit card expenditure of $2,000, and the ability to pay at least $150 in bills monthly. Let’s also assume she has about $100,000 in her account, and looks to invest $40,000 in unit trusts.
| Salary Crediting | Credit Card Spend | Bill Payment | Total | |
| Standard Chartered Bonus$aver | 1.00% | 1.78% | 0.25% | 3.78% + 0.75% (invest interest) + 0.10% (base interest) = 3.88% |
| BOC SmartSaver | 1.20% | 1.60% | 0.35% | 1.95% + 0.40% (base interest) = 3.55% |
| OCBC 360 (from 1 April 2017) | 1.20% | 0.30% | 0.30% | 1.80% + 1.20% (wealth bonus) + 0.05% (base interest) = 3.05% |
| UOB One | Depends on account balance | Depends on account balance | Depends on account balance | 2.38% + 0.05% (base interest) = 2.43% |
| DBS Multiplier | Depends on total transaction amount | Depends on total transaction amount | Depends on total transaction amount | 2.08% |
So naturally, this scenario was designed to easily meet the minimum requirements for all the savings accounts involved. And because the Standard Chartered Bonus$aver account gives you bonus interest on the first $100,000 of your account balance, it’s clearly the winner in this scenario. But do note the minimum requirements to qualify for the maximum bonus interest for this account.
The BOC SmartSaver account comes in second place, but their minimum requirements to qualify for the maximum bonus aren’t easily met either. The good news is that you don’t need to invest or buy insurance to qualify for them.
So, is it time to switch from the OCBC 360 account?
The revamped OCBC 360 account is top in the second scenario, because you can now be rewarded for a smaller amount of investment. Elsewhere it comes in second and third place, essentially staying strong in all scenarios – with only the UOB One account close by.
Ultimately, if it’s interest alone that you’re interested in (pun not intended), then the BOC SmartSaver is clearly a better choice. But if you’re looking for a bank with an extended suite of products, and you want to be rewarded for growing your financial portfolio, then the OCBC 360 account, despite the revamp, manages to defend its place.
But if UOB is smart, they’ll look towards closing the gap even more.
Are you planning to switch savings accounts? Share your thoughts with us.