OCBC 360 Account cutting interest rates again from 1 February 2021

OCBC has announced another set of changes to the OCBC 360 Account that take effect from 1 February 2021. This marks the fourth update to interest rates in less than two years, after revisions in May, July, October 2020. 

These changes will see the maximum effective interest rate (EIR) for the OCBC 360 Account reduced from 2.68% to 2.38% p.a. For those who don’t insure or invest with OCBC, your EIR will fall from 1.08% to 0.98% p.a. – high time to start looking at alternatives. 

How is the OCBC 360 account changing?

From 1 February 2021, OCBC will make the following changes to the 360 Account’s bonus interest structure:

tl;dr: OCBC has reduced the interest payable for the first S$50,000 in the Salary, Wealth (Insure) and Wealth (Invest) categories. This has the net effect of lowering the maximum EIR on the 360 Account from 2.68% to 2.38% p.a. 

All other terms remain the same; i.e the minimum salary credit for the Salary bonus is still S$1,800, the increase in ADB to trigger the Save bonus is still S$500, and the Wealth (Insure) and Wealth (Invest) bonuses are still payable for a 12 month period.

For those who don’t invest or insure with OCBC (like me), your maximum EIR will fall from 1.08% to 0.98% p.a. That’s kind of a bummer, but frankly speaking, I haven’t been parking much in my bank accounts ever since interest rates started getting nerfed last year.

Alternatives to bank accounts

Instead, I’m using a mixture of insurance savings accounts and products like StashAway Simple to hold my dry powder. These provide the same liquidity and capital protection as bank accounts, while offering superior interest (and some token insurance coverage to boot). 

Min. Amount	S$500	S$50	S$2K
Max. Amount	S$100K	S$200K	S$20K
Interest	First S$10K: 2% p.a^ Next S$90K: 1% p.a	First S$10K: 1.8% p.a Next S$190K: 1% p.a	1.8%
Withdraw (Amount)	Any amount	Any amount	Multiples of S$100
Withdraw (Fee)	No fee	S$0.70 fee*	S$0.70 fee#
Capital Guaranteed?	Yes	Yes	Yes
Life Protection	105%	105%	105%
Retrenchment Benefits	Yes	No	No
^Bonus 0.5% p.a available for those who spend on Singlife Card until 28 Feb 2021 *S$0.50 for DBS/POSB accounts #No fee for withdrawal to Dash e-wallet

Regardless of which plan you pick, you can look forward to 1.8-2.0% p.a in interest:

• Singlife: 2% (non-guaranteed)
• GIGANTIQ: 1% guaranteed + 0.8% non-guaranteed (for first policy year)
• Dash EasyEarn: 1.5% guaranteed + 0.3% non-guaranteed (for first policy year)

The “non-guaranteed” bit scares people, but it’s less insidious than it sounds. Returns aren’t guaranteed because they may change in the future. However, there’ll be adequate notice provided (as per MAS regulations), so you’ll have the option to take your funds out before the lower rates kick in. In other words, you won’t be in a situation where you find out after the fact that your interest in a given month was lower than advertised. 

By opening these three accounts, I can earn 1.8-2% p.a. on S$40,000 of my short-term funds- not life-changing, but certainly better than most bank accounts at the moment. There’s no hoops to jump through, no minimum credit card spend, no salary crediting requirements. Easy peasy. 

Here’s some referral bonuses to get you started:

• GIGANTQ: Sign up via this link to earn a bonus S$10 in PolicyPal credits upon approval for GIGANTIQ

I park the rest in StashAway Simple, which earns a projected rate of 1.4% p.a. However, I will be looking at shifting some to Endowus, which projects a higher return of 1.7% p.a. (and actually outperformed the projected yield in 2020). 

Conclusion

I don’t keep a significant balance in my 360 Account anymore, so the latest changes are more annoying than deal breaking. That’s not to single out OCBC of course; it’s just part and parcel of the macroeconomic environment we’re in right now.

The good news is that you don’t need to take sub-1% returns on your short-term funds. Insurance savings plans offer much more competitive interest, with the same liquidity and security people look for in bank accounts.