Analysis: OCBC 360 Account Increases Interest Rate From 1st September 2022

As anticipated, OCBC has increased the interest rates of OCBC 360 Account in line with the rising interest rate environment. OCBC advertises an effective interest rate of up to 4.05% p.a. on the first S$100,000 of savings, although we probably know that such marketing tend not to play out as favourably in real life. Let’s take a look at some scenarios and realistic rates one would get.

New rates

It’s been some time since I talked about OCBC 360, so a refresher on its features/requirements seems timely. OCBC 360 Account has 6 different categories, and fulfilling each category gives you bonus interest on top of the base 0.05% p.a. rate:

	Salary	Save	Spend	Insure	Invest	Grow
First S$50,000	0.6%	0.2%	0.2%	0.6%	0.6%	0.6%
Next S$25,000	1.2%	0.4%	0.4%	1.2%	1.2%	0.6%
Next $25,000	2.0%	0.6%	0.6%	2.0%	2.0%	0.6%
EIR*	1.1%	0.35%	0.35%	1.1%	1.1%

The 4.05% p.a. in OCBC’s marketing assumes you fulfil the following:

• S$100,000 balance
• Salary + Save + Spend + Insure + Invest

As marketers tend to do, this is the maximum benefit one can get, and does not paint a realistic picture. Let’s take a look at some more practical concerns.

EIR goes down with a lower balance

Do note that the rates are “top-heavy”, meaning to say that more interest is given to amounts beyond the first S$50,000 and S$75,000 of the account. Someone with a S$50,000 of balance, for instance, will only get rates in the first row of the table above.

Even after fulfilling 5 categories, the EIR for a S$50,000 balance is 2.25% p.a. (0.6% Salary + 0.2% Save + 0.2% Spend + 0.6% Insure + 0.6% Invest + 0.05% base interest). Seems decent enough, but let’s not forget that achieving 5 categories isn’t an easy feat.

Categories to fulfil

Salary – easy
Salary crediting is perhaps the easiest requirement to fulfil here, with S$1,800 being the minimum amount of salary that needs to be credited via GIRO. A low amount is obviously great not only for people with lower incomes, but also those who are on good terms with their HR department and able to split their income across different bank accounts that require income crediting.

Save – easy
Increasing the average balance of the account by $500 each month is sufficient to achieve this requirement. It is relatively simple, but it also means that the funds in your account become a little more sticky.

Spend – relatively easy, but perhaps not attractive
Spending at least S$500 to the OCBC 365 Credit Card shouldn’t be too difficult for most working adults, I suppose, but whether you would want to is a different matter. The card is pretty decent for things like dining (6% cashback) and travel expenses (3% cashback), but it gives a pretty weak 3% for other things like telco and groceries where cards like Maybank Family and Friends and Citi Cash Back offer a generous 8% rate.

You also need to spend a minimum of S$800 within a month (otherwise the cashback is just a flat and paltry 0.3%), so your “commitment” to this card is a little higher than just S$500.

Assuming you do satisfy this category, and your balance is S$100,000, the added interest form this category amounts to around S$30 a month. Depending on your area of spend, you might find yourself earning more rewards than this if you used other cards instead.

Insure and Invest – avoid
I remain very sceptical about buying insurance and investment products from the bank. With a few exceptions, products sold via banks tend to be costly, and buying insurance/investment products just for the added interest is being penny wise pound foolish.

Even worse, such products tend to have long commitment tenure, while the bonus interest can be rescinded at anytime.

Grow – useless
Grow requires a S$200,000 average balance, and therefore isn’t something we should consider at all since amounts beyond the first S$100,000 barely get any interest.

Conclusion

The realistic categories that one might achieve would be Salary, Save, and perhaps Spend. These are the rates you would expect to get for the different balances and categories achieved:

	EIR for Salary + Save	EIR for Salary + Save + Spend
S$50,000 balance	0.85% p.a.	1.05% p.a.
S$75,000 balance	1.12% p.a.	1.38%
S$100,000 balance	1.50% p.a.	1.85% p.a.

In light of the rising interest rate environment, this isn’t that fantastic. Do check out my Savings page where I list options for relatively risk conservative ways to put aside cash.

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