Thursday, May 29, 2014

Review of Citibank's InterestPlus Savings Account 2.5%

I was alerted of this new change by a post from Cheaponana. I have got to say, he is the most on-the-ball Singaporean finance blogger when it comes to new deals and promotions!

(screenshot of Citi's promotion from Cheaponana)

Well, I guess with OCBC (360 review here), SCB and DBS (SCB Bonus$aver vs DBS Multipler vs OCBC 360 comparison here) well into the fray of stealing each other customers by offering better savings account interest, it was only a matter of time before the other banks join in the fray. I suppose UOB will be next?

This InterestPlus savings account is actually not new. If I am not wrong, before this revision they used to offer 1.88% or 1.58% interest or something like that on bank balances with the similar kind of requirements.

Apparently now, there are 4 ways to earn interest on balances of up to $50,000:
-spend $25 a month with a Citi card (0.1%)
-invest $250 a month in a Regular Savings Plan (1.2%)
-insure $250 a month with insurance (1.2%)
-have a home loan of at least $250,000 (1%)
However, for those who have no noticed, they do not list the base interest of this account! I have tried searching high and low, but I really can't find any mention of this on their website. I'm sure it's between 0.05% to 0.10% anyway.

Spending $25 a month with your Citi cards is easy, so I'm not even going to elaborate on this!

$250 towards a Regular Savings Plan (RSP) is actually a pretty good and sound idea, especially for personal financial planning. The money you decide to put in a RSP is committed on a 12 month's basis and you get to decide which of the various funds you would like to own through the RSP. The good news is that they are partnered with BlackRock, which gives accessibility to the Global Allocation Fund, which not all unit trust providers offer. This is a pretty good fund, and I would consider a RSP into this just to get exposure into this fund! The minimum $250 a month is also good, since usually you would be required $1000 for an initial investment and probably much larger amounts in the future.

However, the catch here is that the RSP eats up 3% of your investment as the sales charge. 3% is a very very high sales charge to be slapped with, especially since any small time retail investor can get any fund offered by Phillip at only 0.75% sales charge. Some funds that are on promotion offer 0% sales charge! So, get an extra 1.2% on you deposits, but pay an extra 2.25% on your regular savings. Citibank is smart! But not in a way that is good for you.

Insurance, pffft. I think if you read this post, you will have a feel towards my view of insurance. I do not believe in investment-insurance or fancy kinds of insurance. Investments and insurance should not mix, so I can't imagine myself or recommending to anyone to get insurance with Citi just for an extra 1.2% bonus interest. However, for people who are really really financially-basket case and looking for safe returns, then I suppose that this would suit them. I just wouldn't recommend it myself.

Lastly is the home loan. I have no idea about home loans, but Citi does not strike me as one of the better banks that offer good home loans in Singapore. However, if you are taking up a loan with them, then you should definitely milk for the interest.


- Bonus interest is based on the larger $50,000 deposit balance (similar to DBS and OCBC)
- Customers already planning to get a Citi home loan would do nothing to get this extra interest
- minimum spend of $25 on your credit card is very very easily done
- access to BlackRock funds

- non transparent base interest
- interest capped at 2.5% even if you are eligible for more
- RSP has a 3% sales charge
- insurance offered might not be what you need, don't get it just for the extra interest

My personal conclusion? Don't bother with this account. The OCBC 360 really offers much more upfront and direct value without much sneaky trickery. If you're done maxing out your OCBC 360 account, and are wondering where to put your excess cash, then you're having a very good problem that I would love to have. I haven't reached that stage in my finances yet, but hopefully soon I will!


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