| Total monthly banking with DBS or POSB | Interest Rate (p.a.) |
| < S$7,500 | 0.05% |
| S$7,500 to <S$10,000 | 0.98% |
| S$10,000 to <S$12,500 | 1.28% |
| S$12,500 to <S$15,000 | 1.48% |
| S$15,000 to <S$20,000 | 1.68% |
| S$20,000 and above | 2.08% |
The "monthly banking" refers to transactions in an existing linked DBS/POSB account that include any (or all) of the following:
- salary deposited via GIRO from your employer
- DBS/POSB credit card bills
- DBS/POSB home loan
- investment dividends credited
Seems attractive. But it took me a while to figure out what the higher interest rate was applicable to.
I figured that since I had all 4 factors, I would be able benefit from the higher interest rates. Imagine, a $50,000 multiplier account linked to a savings account that had $15,000 worth of "monthly banking" transactions would attract 1.68% p.a. interest. That's $70 of interest each month! For some reason, the online calculator at the same DBS website indicates $69+ instead. Not sure why. In either case, it sure beats the miserable near zero interest rate of the standard savings account.
As advertised, there are no monthly account fee and no initial deposit required, but required a minimum age of 18 for the account holder. There is a $30 charge if the account is closed within 6 months. Looked ok, so I opened an account to begin with.
Unfortunately, what I didn't read was the fine print that if the amount was less than $10,000 a month, a charge would be levied! Seems I was docked $25 for that folly in that first month. Pretty silly, losing money to the bank instead of gaining from the interest. Sigh.
[Since 1 Jul 2014 though, DBS appears to have revised the minimum requirement to $3,000.]
I raised my savings deposited in that account subsequently and have earned $38.56 of interest over the next two months. So it works as advertised. BUT, do read the fine prints! Caveat emptor.
[Thought: Even CPF-OA returns a better rate at 2.5%. Of course, that comes with the lock-in till retirement if still short of the minimum sum.]
It is actually a multi-currency account but I have not used the foreign currency features. I suppose I could deposit the US$ cheques I sometimes receive from the US$ denominated ETFs into such an account.
If the savings are placed in foreign currencies, the interest rate tables are different. The Aussie$ being the most attractive. But then again, it comes with the forex fluctuation risks and the Aussie$ has fluctuated significantly of late.
Bottomline: If you do have a steady level of "monthly banking" with DBS/POSB and have the cash to spare, this may be worth your while.
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