OCBC 360 Account Offers The Best Fixed Deposit Rates

OCBC 360 Account

This is a contribution by Alison, who blogs at www.heartlandboy.com

Readers may be surprised that Heartland Boy is suggesting that an actual banking account, as opposed to some plain-vanilla fixed deposit schemes, offers the best fixed deposit rates in town currently. Ever since DBS launched its DBS Multiplier Programme with headline grabbing interest rates, it has forced its key competitors to react accordingly. As a result, this has spawned a new type of hybrid savings account which typically rewards account holders with significantly higher  interest rates than the moribund 0.05%. OCBC has its own OCBC 360 Account while UOB has its UOB One Account.  After comparing the various bank offerings, Heartland Boy chose the OCBC 360 Account as he thinks it offers the best fixed deposit rates amongst the local banks.

HOW THE OCBC 360 ACCOUNT WORKS

OCBC rewards account holder bonus interests for completing a myriad of tasks. This is in addition to a base interest of 0.05% per annum. The respective bonus interests applicable to the first $60,000 of the account holder balances are:

  1. 1.2% per annum when your credit your salary of at least S$2,000 through GIRO
  2. 0.5% per annum when you pay any 3 bills online or though GIRO
  3. 0.5% per year when you spend at least S$500 monthly on OCBC Credit Cards
  4. 1% per annum when you purchase a new insurance (eg: Policies of at least S$2,000 in annual premium) or investment product (Unit Trusts or Structured Deposits of at least S$40,000) with OCBC

Source: http://www.ocbc.com/personal-banking/accounts/360-account.html

The bonus interest accumulates and pays when you do all of the above of any of the following. As an illustration, if you satisfy only criteria 1 and 2, you would still be eligible for 1.7% bonus interest per annum.

TIPS ON MAXIMISING THE OCBC 360 ACCOUNT

  • Make sure that the salary credited into your OCBC 360 Account uses a code recognised and approved by OCBC in order to earn the 1.2% bonus interest.
  • A working adult should easily satisfy the criteria of paying 3 bills online (mobile phone, credit cards, insurance premiums etc). If you do not meet the criteria of paying 3 bills online, offer to help pay some of the household bills, such as broadband or utility charges, online.
  • Whenever possible, apply for GIRO so that the bill payments are automated. This ensures that you will never forget and are guaranteed to complete that task.
  • OCBC offers plenty of attractive credit cards, such as the OCBC 365, OCBC FRANK, OCBC Robinsons etc. Choose a credit card that is most compatible to your spending habits. For instance, if you enjoy dining out on weekends, you may apply for the OCBC 365 credit card to earn 6% cashback. If you are an online shopaholic, you can earn 6% rebate on OCBC Frank credit card.OCBC Credit Cards
  • If you are paying bills to an organisation which OCBC Credit Card has a partnership with, you can apply to pay through GIRO for greater bang on your buck. For instance, Heartland Boy’s M1 bills are deducted monthly via GIRO on his OCBC 365 credit card. He gets a 3% cashbackfor setting up a recurring telco bill, as well as becoming closer to achieving the S$500 minimum spending on an OCBC credit card as required by the OCBC 360 Account. That is equivalent to killing 2 birds with 1 stone.
  • If you are capable of making your own investments, you may consider forgoing the 1% bonus interest applicable for new insurance or investment products. That is because the expenses and fees that these products typically charge may well exceed the incremental 1% bonus interest that you earn.
  • The bonus interest is calculated based on average daily balance, so you cannot “game” the system by withdrawing money at the beginning of the month and depositing money at the end of the month and still hope to get the full interest over the month.

WHAT HEARTLAND BOY LIKES ABOUT THE OCBC 360 ACCOUNT

  • Previously, Heartland Boy was using the POSB Savings Account, an account his parents set up for him after he got tired of playing with his piggy bank. This account was paying a miserable 0.05% per annum and yet Heartland Boy continued using it out of habit and convenience. This was despite Heartland Boy knowing that he was actually losing money in real terms as Singapore’s historical average inflation was probably 2% per annum. However, since switching over to OCBC 360 Account, Heartland Boy feels awesome whenever he sees the bonus interest roll into his OCBC 360 Account. It was the same feeling he had when he was a small kid collecting candies after accumulating a series of stamps at the funfair.
  • There is no lock-in period and you are free to utilize the savings inside the OCBC 360 Account whenever you need to. This is in contrast to the traditional fixed deposit schemes whereby there is a lock-in period.
  • Informing Heartland Boy’s Human Resources Department to change his salary crediting account was surprisingly straightforward. All it took was an email instruction and he only had to do it once!

If you are unconvinced and still fret over the hassle of changing your monetary habits, Heartland Boy can assure you that once you have done it, it will become habitual eventually and you will thank yourself for having done so!

Read More...

How I Travel For Free By Planning My Own Finances

How I Travel For Free By Planning My Own Finances

I just got back from Hong Kong.

While i love the amazing skyline from Victoria Peak, what got me excited were not the insta-worthy photos i took or the dim sum i gobbled down at Lung King Heen.

It was the fact that i actually travel for free.

Free? Does it means that i won a free trip to Hong Kong or had my travel sponsored by a company?

Good guess, but nope!

Well, the trick here is about planning my own finances. I couldn’t have included Hong Kong into the list of places to visit without exceeding the budget i set aside for this year.

A few years ago when i was still a student, i didn’t care too much about my own finances since i was spending within my means. Like many others, I had my money stashed away in a POSB’s saving account. Who care about interest rates when we hardly have five figures in our possession? The returns were pittance that it hardly warrant any extra attention.

My attitude changed when i had friends who were boasting about how much money they were making. I told myself i wanted to be like them — to be rich, in the shortest amount of time.

It seems then that the only way is to invest venture gamble into the stocks market. I had no idea where to start until one day i was approached by a financial adviser when i was exiting the MRT station. And being a ambitious and impulsive young adult, i was persuaded into buying a saving plan that invests into the market with some kind of insurance cover that comes with it.

It felt good even though i had no idea what i was buying into – the feel good factor that i am now investing like an adult.

I call in to check on the policy every month, but apparently i was told that it is still in the early stage and had little or no cash value.

After a few months i gave up because it hardly grows and sadly i was told that if i were to terminate the plan, i would end up with almost nothing.

The change

From then on, I told myself that no one else can manage my own finances except myself. I need to take the responsibility or i will be the one suffering down the road.

I spend months reading up on books, forums, MoneySense and any resources that i could laid hands on. I begin to understand the importance of budgeting, investing and how to manage my own finances.

I started by switching my funds to a higher interest-bearing account such as the OCBC 360 where customers could potentially earn up to 3.25% as at 1 May 2015.

OCBC 360 Account Revised

It was also then that i realized that previously i was holding on to an investment-linked plan which comes with high fee and charges. It is not cost-effective to achieve my goals and i had to take the hard decision to surrender and make a loss.

A better way that i learnt is to buy term insurance and invest the difference. Term insurance is cheap and affordable although it does not have cash value. But the difference i could potentially save could be put into better investment vehicle such as the low cost fund that tracks the Straits Time Index (STI) which has a historical return of around 8 per cent in the long run.

I was introduced to the online platform DIYInsurance — a portal which allows me to compare the different term insurance plans out there. What appeals to me is that they rebate 30% of the commission back to the customer and at the same time still make an effort to go through the planning process, making sure that the person is on the right track.

DIYInsurance

They have a live chat system where i can ask any questions on how to use the online platform, as well as clarifying with the client services manager on the semantics of insurance definition. It was fuss free and it beats the inconvenience of holding on to the line when you call in to financial institutions for enquiries.

If you are wondering how much money i save using the DIY method, i have done up some numbers for comparison.

Comparison ILP TERM

(Click to enlarge)

As you can see, i was previously paying $300 a month for a $200K cover on death and disability and a $50K rider on critical illnesses. If the funds grow at 4%, it will take me 20 years to break even and 35 years to make a small profit of $15K. (calculate the ROI)

If i were to employ the alternative strategy of buying term and investing the difference, i’d be merely paying $100 a month for a $500K cover on death, disability and $300K on critical illnesses. The other $100 will be channeled to a low cost fund, and assuming it grows at the same rate, my portfolio would be sitting at a value of $35K after 20 years or $88K after 35 years. (note that i’m contributing 2/3 of what i’d have otherwise contributed to the ILP and i have pegged its growth at 4% for comparison purposes)

As a result, i managed to put away $100 a month into my travel funds and this adds up to a significant amount of $1,200 a year. A sum that is sufficient for me to pay for the return air ticket to Hong Kong which including hotel and shopping expenses incurred during the trip. I am also getting $400 worth of commission rebates from DIYInsurance which i can either re-invest or spend it on my next trip. (I have re-invested it)

In conclusion

By taking charge of my own finances, i am now enjoying a higher returns of 2.25% (excluding the 1% bonus to insure or invest) from the money sitting in the bank as well as future incoming funds. I have also manage to cut down on unnecessary fee and charges slapped on expensive insurance products by switching to a more affordable term cover and investing in a low cost funds.

I have lost some money in the investment linked product but at the same time i have took home valuable knowledge and wisdom of managing my own finances, and as a result, created more wealth from it.

Well, perhaps a road trip to Australia next?

(Article contributed by Cheryl, a Marketing Executive working in Singapore.)

 

Read More...