On 2 May 2020, OCBC made a few changes to the OCBC 360 account. Some of these were good, some less so, but on average they balanced out.
Barely one month later, OCBC has announced a second set of much more significant changes that take effect from 1 July 2020.ย These will, unfortunately, be dealbreakers for me.
To summarize, the maximum interest you can earn on the OCBC 360 account will be reduced from the current 3.35% to just 2.15% p.a. This comes from a 50% cut in the salary crediting bonus, and the complete removal of the credit card spending bonus.
How is the OCBC 360 account changing?
From 1 July 2020, OCBC will make the following changes to the 360 account’s bonus interest structure:
| ย | Current | From 1-Jul | ||
| ย | First S$35K |
Next S$35K |
First S$35K |
Next S$35K |
| Salary | 1.2% | 2.4% | 0.6% | 1.2% |
| Spend | 0.2% | 0.4% | – | – |
| Save | 0.2% | 0.4% | 0.2% | 0.4% |
| Wealth | 0.6% | 1.2% | 0.6% | 1.2% |
| Grow | 0.8% (Average daily balance >S$200K) |
0.8% (Average daily balance >S$200K) |
||
| Max Interest on first S$70K |
3.35% p.a | 2.15% p.a | ||
| Max interest includes base interest of 0.05% p.a | ||||
The maximum EAR you can earn on the first $70,000 will be reduced from 3.35% to 2.15% p.a. This arises from two main changes:
Salary bonus cut from 1.8% to 0.9% p.a
The bonus interest awarded for crediting salary to the 360 account will be cut by 50%, from 1.8% to 0.9% p.a.ย That works out to S$630 less in interest each year, assuming you keep S$70,000 in your account.
What’s interesting is that this comes so soon after OCBC made very some positive changes to the salary crediting mechanic. On May 2, OCBC cut the minimum salary credit from S$2,000 to S$1,800, while boosting the interest on the S$35-70K range from 2% to 2.4%.
| OCBC 360 Salary Crediting Bonus |
||
| ย | First S$35K | Next S$35K |
| Until 2-May-20 (min S$2K) |
1.2% | 2.0% |
| 2-May to 1-Jul-20 (min S$1.8K) |
1.2% | 2.4% |
| From 1-Jul-20 (min S$1.8K) |
0.6% | 1.2% |
Although the lower salary crediting threshold of S$1,800 will be kept from July 1, the massive cut in interest means we’re worse off than before.
Credit card spending bonus removed
The credit card spending bonus was already cut once on May 2, but OCBC is now removing it completely.ย Instead of earningย 0.3% p.a on the first S$70,000, you’ll now earn nothing.
| OCBC 360 Credit Card Spending Bonus |
||
| ย | First S$35K | Next S$35K |
| Until 2-May-20 (min S$500) |
0.3% | 0.6% |
| 2-May to 1-Jul-20 (min S$500) |
0.2% | 0.4% |
| From 1-Jul-20 (min S$500) |
None | None |
This change strikes me as even more curious, because today’s the day that the new T&Cs kick in for the OCBC 90N, OCBC Titanium Rewards and OCBC VOYAGE.
From today, OCBC cardholders will:
- Earn points in blocks of S$5 instead of S$1, meaning that any spending will be rounded down to the nearest S$5 before awarding points, and any transaction <S$5 will earn nothing
- No longer earn points on SimplyGo, certain ridesharing apps like Ryde and TADA, public/non-profit hospitals, or polyclinics
You’d think that these additional restrictions would make OCBC want to boost the attractiveness of its cards in other ways, not further disincentivize users…
Do we need to reconsider Bocxit?
When Bank of China announced the upcoming nerf to its BOC Elite Miles World Mastercard, I decided that enough was enough, and to take my business elsewhere.ย
The biggest anchor tying me to BOC was the BOC SmartSaver account, which represented an easy 3.55% p.a. Once I stopped spending on BOC cards, the maximum I could earn with SmartSaver would be 1.95% p.a, but I thought I’d:
- Open a Singlife Account and park S$10K at 2.5% p.a
- Park S$70K in the OCBC 360 account at 2.45% p.a (I do my own investments, so I wouldn’t qualify for the wealth bonus)
- Put the rest in StashAway Simple at 1.9% p.a (non-guaranteed)
But the 360’s nerf throws a spanner into the works. Under the new system, the maximum interest I could earn with OCBC is a measly 1.25% p.a.
So unless someone knows of a better alternative (and please shout out if you do), I’m probably going to keep my BOC Smart Saver account open. I won’t spend anything on the BOC Elite Miles card, but even so I’d still earn 1.95% p.a, better than the 1.25% p.a with OCBC.
I do wonder how long BOC can maintain its current interest rates in the prevailing macro environment though.ย
Conclusion
It’s no secret that interest rates are coming way down. I’m seeing the benefit on my housing loan, but feeling the pinch on my savings accounts.
That said, the latest changes to the OCBC 360 account are a dealbreaker for me, and I’ll be shifting my funds to other higher-yielding (relatively speaking) options.
What other high-yielding savings accounts are you using right now?
DBS multiplier looks more attractive now it seems.
Not sure dbs will follow suit ๐ค?
UOB One account just become better because of this
UOB One is not good for (male?) miles chasers. The only miles card that counts towards the bonus interest accrual is the Ladyโs Card, and that itself is a specialized spend card so you might not consistently put $500 on it every month.
UOB One maxes out at just 1.8% EIR even with card spend so Aaron would be better off sticking with BOC
Singlife is covered by Policy Owners Protection Scheme, but not the deposit insurance scheme because itโs not a member bank (both schemes are administered by SDIC). Your insurance coverage is protected as long as you pay premium. But because you donโt really pay premiums explicitly, Iโm not sure how that would work when it closes down โ though I guess you werenโt looking for protection to begin with.
The savings you are putting in, i.e. The $10,000 or more, it is your premium.
Even if it is, itโs the coverage thatโs protected, not the premium.
the coverage is after everyday, they will pay you
Premium * (1+ Daily Interest)
Agree with Brian. Multiplier easiest to achieve 2.2 โ 3.5% on 50K. Credit card spend and investments with no minimum amount. The key is no minimum amount.
2.2% is easy for any family with regular jobs (hint: joint account). 3.5% possible with investments/trading (includes Vickers for DIY-investments like Aaron) and card spend if it comes to that. And needless to say fairly effortless for those with housing loans.
3.8% is pretty tough without a housing loan. The insurance option lasts 12 months only and choices available not awesome.
iโve thought about dbs, but vickerโs minimum commissions bug me. iโm using SCB right now which doesnt charge min commission for priority banking clients.
If you can get to DBS treasures, the brokerage is 0.12% with no minimum sum.
UOB is good with UOB One card if you are not adverse to using it for general spend where 1.4 mpd is comparable to 3.33%
Alternatively, you just need 3 GIRO transactions.
Having said all that, I believe all banks will be changing their policies for the worse. This is just the beginning.
there is a minimum sum for US trades though, while there isn’t for SCB priority banking. Minimum fees are bad for small traders like me, so I lean towards SCB in that respect.
Oh I use it interactive brokers for US trades. I do monthly DCA so min commission there ain’t a problem.
Generally, both banks do better than OCBC now..
Uris is right. I do the same with DBS when I don’t have a larger transaction to do on Vickers. If nothing else then buy 10 units of a local ETF for <$30 & <$1 commission to achieve the 2.2-3.5% interest.
For those who invest every month anyway it’s probably more convenient than keeping track of minimum spending requirements and applying for GIRO bill payments that don’t earn points. YMMV
How do you arrive at 1.95% for boc without any credit card spending?
0.4% base interest + 1.2% salary credit + 0.35% bill payment