It must be quite the emotional rollercoaster to be a fan of Iron Man in the Marvel movies. One movie Tony Stark destroys all his Iron Man armours in order to spend more time with his partner Pepper Potts (i.e. Iron Man 3) and in the next movie Tony’s built not one, not two but three new armours and Pepper Potts is nowhere to be seen (i.e. Avengers: Age of Ultron). The OCBC 360 Account is like Iron Man. Let that sink in for a second.
Earlier this month, OCBC announced that their savings account’s unbeatable 3.05% interest rates had dropped. Sure it was still undoubtedly a good deal, but we were all a bit sian. Today, they announced that not only can you earn at a HIGHER INTEREST RATE than before, you might actually be able to earn more INTEREST than before, because the account balance cap has now been increased.
So everything’s great, right? Well, not exactly. We’ll explain.
Firstly, what are the changes to the OCBC 360 Account, exactly?
As we see it, there are 4 main changes to the OCBC 360 Account.
1. You can now earn up to 3.25% on your account balance
We’ll go into details about what the new categories are later, but just bask in the fact that the OCBC 360 is now giving you 3.25% interest per year. This is 0.20% more than they offered when they launched the savings account!
2. Interest will be earned on the first $60,000 of your account balance
This is $10,000 more than before. Assuming you can earn the full 3.25% interest rate, that’s a maximum of $325 more you can earn a year.
3. Your salary now earns you 1.2% interest per year
You can now earn 0.2% more bonus interest than before. Assuming your salary is $2,000 or more and being credited to your OCBC 360 Account, of course. Start banging down the doors to your HR Department.
4. You get rewarded for growing your account balance each month
In addition to the 3.25% you can earn on the first $60,000 of your account balance, you can also earn extra interest by making sure that there is more money in your account each new month. You earn 1% per year for the difference between your monthly account balances.
That means, if you had $3000 in your OCBC 360 Account in May and $4000 in June, then you earn interest on the $1000 increase!
So what are the two new bonus interest categories that can earn you 3.25% interest (and more!) per year?
A. The “Wealth Bonus” – Insurance and Investment
The first new bonus interest category is basically to encourage OCBC 360 Account holders to pump money into insurance and investments. It’s not a small amount of money we’re talking about either.
For insurance products, you have to be paying at least $2,000 a year in premiums per policy for Protection Plans and at least $8,000 a year in premiums per policy for Endowment Plans.
For investment products, you have to invest at least $40,000 into Structured Deposits or Unit Trusts, or $200,000 into bonds or other structured investments.
Clearly OCBC is trying to diversify their customer base with this new category. No one will deny that this is targeted at those who are better-off, and can afford to invest thousands of dollars. After all, if you are already capable of setting aside at $40,000 for investment purposes, why not get rewarded for doing so?
In this way, OCBC is also aggressively pitting themselves against their competition. Their closest competitor is the DBS Multiplier Programme. DBS Multiplier benefits those with monthly cash flow of $20,000 and rewards you for crediting your investment dividends into your POSB/DBS account. With this new category, the OCBC 360 Account might be able to convince those with DBS to jump ship.
In summary, if you’re already covered by one of OCBC’s eligible insurance products, then congratulations, your world just got a little better. You’ll get to earn 1% more interest per year on your OCBC 360 Account. For a maximum account balance of $60,000.
But for most of us, it’s probably better to forget about trying to earn this 1% interest per year. The Wealth Bonus is clearly not aimed at us. But don’t be sian about it. Even without the bonus interest from this category, it’s easy to earn 2.25% interest per year from the other categories. At 2.25%, OCBC 360 still blasts the competition out of the water.
B. The “Save Bonus” – Rewarding You For Not Spending!
This new category is actually not a part of the maximum 3.25% interest per year that you can earn on your account balance of $60,000 or less. Think of it as a reward when you make the effort to save money.
How does it work? While the actual calculation is a little tricky, essentially, you get interest for ending each month with more money than the previous month. You get 1% per year interest on the difference.
Say each month you consistently manage to save $500. You will get about $0.41 in interest per month, for a total of $5 altogether after 12 months of saving.
It may not seem like much, but let’s be honest here. No other savings account gives you a bonus 1% interest per year. The CIMB StarSaver Account only gives you 0.8% interest, and that’s only if you save at least $100 a month (for the Savings account), or $500 a month (for the Current account). Otherwise it’s just 0.5%!
Is the new OCBC 360 Account as good as it was when it first launched? No. Most people will probably only earn 2.25% interest a year, compared to the 3.05% rate you were used to. In fact, even with the new account balance cap of $60,000, you won’t be earning as much interest as before.
In the past, if you had $60,000 in the OCBC 360 Account, with 3.05% interest (capped at $50,000) and 0.05% interest (for the remaining $10,000), your total interest earned would have been $1530 a year.
With the new OCBC 360 Account, if you had $60,000, with 2.25% interest (capped at $60,000), your total interest is $1350. In other words, with the same amount of money, you’re going to earn $180 less in interest.
But there’s no point comparing the present with the past. If you compare the OCBC 360 Account with the other savings accounts in the market today? No contest.
What do you think of the new changes to the OCBC 360 Account? Are you going to sign up for one? Let us know.