The OCBC Bonus+ Savings Account: How much interest

Most local Singapore banks are fighting quite hard to ask you to move your money from one bank to another bank by providing higher interest rate in a super low fixed deposit rate world. OCBC is also doing the same thing.

They brought us a very useful OCBC 360 savings account which a lot of people prefer because there is no need to deposit more and more money into the account (you can read it here), all you have to do is automate salary deposit into the account, pay a number of bills through the account and spend $500 with the OCBC credit card and get up to 3.08% bonus. Best of all you do not need to do all of it. I actually carried out only 2 of the 3 and enjoy 2% bonus per annum (note, this is up to $50,000)

My friend alerted me to this recent initiative, the Bonus+ Savings Account. What screamed at me was a 2.35% per annum interest. I think that will capture a lot of people’s attention as well.

The idea is this:

1. There don’t seem to be a cap such as maximum $50,000 you can enjoy this interest (which the OCBC 360 has), however should you fall below the $3000 maintenance amount, OCBC will charge you $2/mth
2. You have the freedom to deposit more money after the initial amount and withdraw money at any time. However, the interest that you enjoy will be affected based on your deposit and withdrawal
3. At the baseline, your deposit savings enjoy a 0.05% per annum interest (12 times per year)
4. For each month, if you do not withdraw any money, you enjoy 0.55% per annum interest (12 times per year)
5. For the quarter, if you do not withdraw any money for the past 3 months, you enjoy an additional 0.55% per annum interest ( 4 times per year)
6. For the quarter, if you do not withdraw any money for the past 3 months AND if you deposit $10,000 more, you enjoy an additional 1.2% per annum interest (4 times per year)
7. The interest calculation is per day

Man that sounds really good. However, I think for folks who don’t like maths or can’t be bother with it YET want a lot of returns, they could be tempted into this.

First thing first, its not monthly you earn like 0.55% or 1.2%. The return is per annum so for each month you have to do some maths to get how much is the monthly interest.

To make my life easier, I came up with a OCBC Bonus+ Savings Account calculator here. You can make a copy and simulate how much returns you can get. Some disclaimer here, this is my interpretation based on the various terms and conditions and what is provided. I try my best but I am not the most perfect in my interpretation. If you need any clarification do approach OCBC. I won’t reimburse any money for any mistakes.

The first thing you see is some rate conversion of these 0.05%, 0.55% and 1.2% into the monthly rate. If the interest is compounded daily, I suppose I can’t get them to a very fine detail but I believe monthly rates are good enough for us to make educated decisions.

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The annual best case interest shows the annual interest rate that you get to enjoy if you do all the things OCBC want you to do. that is almost 1.18%, which is what is written in their website, so my computation is quite there. Below that, I did a computation when you didn’t deposit more but you also didn’t withdraw. This is as if you treat it as a normal fixed deposit.

The annualize rate you will earn is 0.78%. On $10,000, you earned $78.43, which is right about there.

If you deposit $10,000 per quarter, your returns are higher. You can spread out the $10,000 over the three months. However, to maximise compounding i felt if possible, deposit in the earlier months.

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If every quarter, you withdraw just $1, you forgo your quarterly bonus interests.

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Your returns are cut.

Summary

This account isn’t a big problem. most of the returns is like 0.7%, or slightly below that of CIMB Starsaver at 0.8%. The good thing is that if you need emergency money you can put it here without the fear that you can’t tap your money when you really need it.

Its just the way the figures i felt are presented. Play around with it and realize that the returns are not as spectacular as what we think is.

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