Update: I have made a mistake in the post below and I am signing up for the POSB Cashback Bonus because POSB Invest-Saver qualifies me for my third criteria. An updated post is written here.
Ever since OCBC first introduced the OCBC 360 Account, where one is required to jump through several hoops to qualify for a higher interest rate on his/her saving account, every bank has since been offering one.
I guess all the banks are hoping a consumer would do all his transactions within the same bank, and hopefully at their bank.
I like higher interest rates and have benefited from them for more than 2 years with the OCBC 360. It remains a good program where the Mrs is getting slightly higher than 2% interest on $60,000 and paired with the OCBC 365 card, it gives us pretty good synergy with the cashback.
The BOC SmartSaver program is a pretty good competitor. Honestly, it likely gives a higher interest if you meet the same conditions but I have yet to make the switch for the Mrs as the difference seems rather marginal to us. We probably still prefer the OCBC 365 card as compared to the BOC Family card.
In the past week, DBS/POSB has responded with their POSB Cashback Bonus, hoping to gain some traction in this big battle.
Basically, to qualify for the cashback, you need to fulfil at least 3 out of 5 available conditions:
- Salary Credit (0.3% cashback, $20 cap)
- Credit Card (0.3% cashback, $20 cap)
- Home Loan (3% cashback, $30 cap)
- Insurance (3% cashback, $30 cap)
- Investments (3% cashback, $30 cap)
I will be honest and mentioned that I was very interested since I already automatically qualify for two of them.
I use the POSB everyday card as an EZ Link and charge my home conservancy and utility bills to it and I am on the POSB HDB home loan. The 3% home loan rebate was juicy enough for me to consider signing up on the POSB Invest-Saver for $200/month to get a $30 cashback per month.
However, when I went down to the POSB branch last Friday, I was disappointed to find out that POSB Invest-Saver would not fulfil the “investment criteria”.
And seriously, no financial blogger worth his salt is ever going to purchase a monthly saving plan from a bank that the RM was trying to sell to me.
So even for someone like me who has a mortgage with POSB, it’s not working out.
And even if I had a salary of $5,000 to fulfil that third criteria, I would probably be better off crediting it into OCBC 360.
Let’s illustrate using a numerical example:
I earn $7,000 a month and if the salary is credited into POSB, the cashback of 0.3% would amount to $21 but it’s $20 since there is a cap at $20. $20 x 12 = $240.
If this salary is credited into the OCBC 360 account, and assuming I maintain a balance of $60,000, I am going to get 1.2% of interest a year which amounts to $720 in a year.
$720 > $240
The extra $30 a month I get from my mortgage cashback is also not going to make up the difference.
Some bloggers are apparently gushing over this product while some think it barely merits a discussion.
No prizes for guessing which side I am on. And yes, I am really interested to find out exactly what kind of profile would be better off on this program than other competing programs.
Update: I have made a mistake in the post above and I am signing up for the POSB Cashback Bonus because POSB Invest-Saver qualifies me for my third criteria. An updated post is written here.