OCBC 360 Account Interest Changes (November 2018)

Competition between the local banks for your deposits have been heating up recently as they try to one up each other on savings account interests rates. The latest salvo from OCBC relates to the changes in interest rates for their OCBC 360 Account effective 1 November 2018. As a account holder, I thought I’ll review the changes and share my 2 cents.

Current interest structure can be found here, while revised interest structure can be found here.

Overview

Summary of Changes

Source: OCBC Website

That is a lot of mambo jumbo to describe the changes. To illustrate the changes, here’s a practical comparison between the old and new interest structures.

Comparison

Interest rate comparison

*Interest only applies to first $70,000 of balances

For core interest, I’ll assume most people are able to satisfy the $500 per month credit card spend requirement. At face value, most account holders are worse off as core interest has been reduced for balances below $35k. Actually, due to the tier system, account holders with balances below $70k but more than $35k are also worse off. Here’s a graph to illustrate:

Interest Curve As you can see from the graph, Core Interest has suffered mainly due to the removal of the payment category, which accounts for 0.3% interest. Core interest is only unchanged if you have exactly $70k in balances.

That said, if you include the new Step Up interest category, which requires you to have at least $500 more in month on month average balance (which I assume most Singaporeans are able to satisfy), you will then be able to push your interest to exceed the old rate of 1.8% to the max of 2.25% for balances more than $35k.

My Thoughts

The objective of the changes made is pretty obvious to me – OCBC wishes to increase their deposit base, as seen by the introduction of the tiered system, the Step-up category and to a lesser extent, the Boost category. It’s clear they wish to drive people to have at least $35k balance in their 360 accounts as that’s where the better interest rates come from.

In general, account holders like me who do not hold large amounts of cash, these changes are bad. However, this will have minimal impact on me due to my minimal cash balance anyway. That said, my guess is that risk averse Singaporeans who love to hold large amounts of cash will love these changes.

As a side point, I find it interesting that they also chose to cut the Wealth category interest to 0.9%, probably to help fund the new Step Up interest category.

What do you think of the changes to the OCBC 360 Account? Share your thoughts in the comments.

Happy Hunting,
KK

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