Friday, January 2, 2015

OCBC Bonus+ Savings Account and Premier Dividend+ Savings Account Review

Saw this ad recently?

Let me confess, I am a rate tart. I am a freelance financial prostitute. I patronize whichever bank gives me the highest rate and I have no loyalty. As such, I sleep with one eye open, scanning all the banks for the latest promotions. Just the other day when I walked past an OCBC branch, I saw this ad. I didn't even know about it! I came back home and did a search and found nothing on it. Very odd indeed. However, today I saw that it is now their homepage advertisement if you go to their personal banking site.

Anyway, even though there is the OCBC Premier Dividend+ savings account which promises a higher rate, we're only going to look at the OCBC Bonus+ Savings Account. Why?

$100,000 minimum initial deposit, that's why. No more elaboration needed.

So, the OCBC Bonus+ Savings Account, let's examine this further.

$10,000 minimum deposit of fresh funds, hmmmm.... sounds do-able for 2.35% pa. Actually, that's really attractive for 2.35% pa right?

Of course it is, because they won't actually give you 2.35% pa! You only can get a MAXIMUM of 1.18% pa interest.

Whot? Don't believe me? Looky here.


Oh boy. What a con-job.

By my calculations of 0.6% + 0.6% + 1.105% for each month of the quarter, you only get 0.768% pa if you sit on your hands quietly and don't ever withdraw money from this account. Like a fixed deposit. But you only get 0.768%.

So, let's recap:

You get 2.35% pa interest for ONE month every quarter if you deposit $10,000 fresh funds AND make no withdrawals.
That gives you a total effective interest rate of 1.18% pa, if you deposit $10,000 of fresh funds every quarter and make no withdrawals for 1 year.

If you don't have $10,000 of fresh funds to deposit every quarter (I assume most of you are like me and do not), you will only get a maximum effective interest rate of 0.768% pa if you make no withdrawals the whole year.

TL;DR: For a magical fixed deposit structured with complex and funky features, you get 0.768% pa interest, NOT the 2.35% pa as cleverly advertised.

Verdict: As reigning supreme (self-declared) rate tart king of the Singapore market, this is shieeeeeet.

"What the hell is this?"
"What kind of bullshit is this?"
"You people must be out of your damn minds!"

If you want a fixed deposit solution, the plain vanilla OCBC Fixed Deposit should suit you just fine, with a minimum $20,000 initial deposit for 1.3% pa.

If you want a good-rate, liquid savings account, then the CIMB StarSaver should be a good choice with 0.8% pa with just $100 increasing balance every month. Much much more realistic than $10,000 top-up a quarter, and with no withdrawal restrictions as well.

Unfortunately, CIMB has stopped their step-up fixed deposit promotion, which is a good blend and mix of good rates of a fixed deposit, and the liquidity of a savings account. Oh well, it is a sad day for retail investors like us.

Anyway, I hope this exercise is eye-opening to those people who are untrained in finance. Although ads may state one thing, reality might be another. If something really is too good to be true, it is definitely a must-do to step back and analyze if it really is true, or if it is just another gimmick.

Sad to say, but this OCBC promotion is a gimmick. A very good gimmick that will get a lot of people suckered into locking up their funds in a lower yielding account, rather than a simple straight up plain vanilla fixed deposit.

To a more cautious 2015, cheers!


  1. Thanks for clarifying a complex marketing by this major bank.


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