Friday, June 2, 2017

1.85% Savings Account?! LEGIT, NOT CLICKBAIT I PINKY PROMISE

Edited because of some errors, changes in green.


I opened my Citibank MaxiGain account last year in June. I talked about it in Jan about it being a great cash savings vehicle.

It's an interesting account, to say the least.

It gives you a variable base interest rate, based on 80% of the 1m SIBOR (current 0.81%, so effective 0.648%).
It also gives you an increasing fixed rate, based on how long you had the account. (increase in 0.1% per month, cap at +1.2%)
The drawback is that if the lowest balance breaches the previous month's lowest balance, you lose half of your counters.

Well anyway, I've good news to report!

After having this account for 1 year, for the month of June I will be receiving about 1.85% interest for my balances this month! So come 1st July, I should be looking at some nice phat interest returns, ehehe!

However, I must point out that I made a silly mistake. Citibank calculates the bonus interest to be paid in the current month by looking at the lowest balance of the previous month. This is important. Why?

I made the mistake thinking that it is based on average balance, instead of lowest balance. This means that even though this month I will be receiving the full 1.2% bonus interest, this bonus interest is only on the lowest balance of last month (May 17).

I transferred in a lot of cash during the 1st week on May thinking that I would now be fully maximising my interest, but I was wrong... my bonus interest credited 1st June is based of my lowest balance in May!

But it's okay, next month I'll be getting 1.85% returns instead of 0.8% that I used to get with CIMB. Thanks Citibank!

Honestly, ~1.85% (because of 1m SIBOR fluctuations) is really dope returns for cash. I can immediately cash out if I want to. There is no liquidity risk. Thinking about it, it's actually the same interest rate that OCBC 360 offers you AFTER making you jump through 3 hoops, and OCBC 360 has a lower eligible funds cap.

This account is like a hybird fixed deposit / savings account. I get the higher rate of a fixed deposit (MUCH higher rate), and I also get the liquidity and flexibility of a savings account if I want my money back.

In my opinion, this account is best used as an emergency fund. Good interest rates, but quick access to money if you need it.

It cannot be used as a day to day account because there is a risk that your balance might drop below the previous month's and that would halve your interest rate from the fixed counters bonus.

6 comments:

  1. the variable base interest rate should be 80% of 1 month Sibor (current 0.81%).
    The base rate should be 0.648% (0.81% x 80%)

    ReplyDelete
    Replies
    1. OOPS big mistake! Thanks for pointing it out!

      Delete
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  3. yea, as pointed above, its 80% of 1m Sibor.
    still better than alot other savings acct...
    and actually can be a good hedge if one has a mortgage loan pegged to sibor too.

    i use this to accumulate emergency fund too.
    only problem, is it takes a long runway to get a decent i/r%

    and hope that CB doesnt change their TnC for this account like OCBC.

    ReplyDelete
    Replies
    1. Alamak, making changes now!

      How many counters are you at now, foolish?

      I think if interest rates drop (which I think it could), CB would change their T&Cs. This account came out when everyone was postulating higher rates.

      Delete
  4. Discovered some downsides to this account when I started one last month.
    1. Interest is only paid out annually.
    2. I was under the impression that withdrawing only the interest would maintain your lowest balance but was told that doing so would still reset your counter to 0 or 6. So no consistent 2% p.a. if you intend to withdraw the interest.

    ReplyDelete

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