I have been using OCBC 360 account since 2015 as its interest mechanism and returns work best for me, in a fuss free manner too. Based on my needs and financial situation, I have always treated the money in OCBC 360 account as my emergency fund (i.e. not investment fund). After many years of working and saving, my balance exceeded $70,000. From then on, I allotted the excess money into CIMB FastSaver account to earn 1.0% return in a fuss free manner (the 1% is capped at $50,000).
Every year, OCBC reviews and revises the interest mechanism and although the returns decrease each time, it is still the best option for me. In Nov 2018, OCBC the interest mechanism was revised yet again. This time, for once, the returns seem to be more flavourable for me. Basically, if you have more money in your 360 account, it will be more flavourable for you. This is because the interest rate is higher for accounts with balances of $35,001 to $70,000.
There is a new bonus interest component called “Step-up” when you increase your account balance by S$500 compared to the previous month. Also, you will earn a Boost bonus interest on the increase in your account balance compared to the previous month. You can refer to the image appended below or visit OCBC’s website for more details.
|From: OCBC website|
With this change, I reviewed (i) whether and (ii) how I should shift my money from CIMB FastSaver to OCBC 360. I know for sure that the Step-up and Boost bonuses are going to make a different.
I did a simulation to transfer an amount of money, which has to be more than $500 from CIMB FastSaver to OCBC 360. For calculation purposes, the amount of money transferred is $600 per month. I also assumed the following:
- Had balance of $70,000 in OCBC 360 at the first month;
- Had balance of $25,000 in CIMB FastSaver at the first month;
- Met the requirements in OCBC 360 to qualify for the Salary, Spent, Step-up and Boost bonuses;
- Calculation for Salary bonus was based on the non-promotional rate (promotion rate is up to 2.0% per year, till 31 Mar 19); and
- Interest was calculated on per month (31 days) basis.
Based on the simulation, it makes sense to transfer an amount larger than $500 from CIMB FastSaver to OCBC 360 on a monthly basis. You can get $1,842.57 of interest in a year by doing so! You will also notice that the average return based on the calculation is 1.54%. If you have $50,000 in your CIMB Fastsaver, your interest and average return can be as high as $2,097.37 and 1.75% respectively.
If you decide not to transfer any money from CIMB FastSaver to OCBC 360, you will not enjoy the Step-up and Boost bonuses. You will only get $1,574.63 of interest.
In such a case, I would just set up a monthly recurring transfer from CIMB to OCBC 360 and sit back and enjoy.
Note: I did not show calculations of other banks' saving accounts as either they did not meet my need or I am unable to meet their savings requirements to get the maximum benefit. This is not a sponsored post by OCBC or CIMB. Please do your own due diligence.