Tl;dr: not having any cashback/miles on the associated card makes you miss out on more money than the interest rate provides
When I shared my article on getting about 3% pa of interest, a couple of friends pointed out that they get 3.88% on their Bonus$Saver Account from Standard Chartered.
I was looking to open this account a couple of years ago, so I tried to refresh my memory on why I passed it over. It quickly came back to me: a large chunk of the 3.88% comes from spending $2,000 on the Bonus$aver which has no cashback nor miles at all.
The high interest rate is a trap!
Again: no cashback nor miles at all. This is a really high opportunity cost considering the rather significant requirement of $2,000 a month.
At its theoretical best (including having to invest/insure with the bank), one gets about $323 of interest per month with Bonus$aver.
|Bonus$aver||UOB One Account + Card + GPMC|
|Interest Rate||3.88% pa on $100,000 balance||2.44% pa on $75,000 balance|
Even at 25% less savings, a UOB One account + UOB One + GrabPay Mastercard strategy easily nets a higher return of $352.
A fairer comparison would be to remove the invest/spend category for Bonus$aver, and include $25,000 placed in another account outside of UOB One to make both situations start from the same assumption of $100,000 savings.
|Bonus$aver||UOB One Account + Card + GPMC||Another Bank Account|
|Interest Rate||3.13% pa on $100,000 balance||2.44% pa on $75,000 balance||1.5% pa on $25,000 balance|
The opportunity cost of not earning any rewards on the $2,000 spend starts to become a lot more apparent. The cashback strategy would still net more return even if the cashback was halved to 5% to give $100 (instead of $200).
As you can see, having a high interest rate counts for very little if you are losing significant amounts of cashback on the $2,000 spend to achieve this.
Not ideal for low spenders either
If you spend only $500 a month, the account gives 2.13% pa interest, which pales in contrast to 2.44% pa given by UOB One, on top of whatever cashback/miles your UOB card gives you.
The Bonus$aver does have a higher capacity of $100,000, but this is easily replicated by having another account to accompany the $75,000 on UOB One Account since you can replace the salary requirement with 3 GIRO bills for UOB One. DBS Multiplier easily gives you 1.85% pa on your remaining $25,000 if you make up at least $2,500 on your salary credit and DBS card spend (even a dollar works), and all your card spend again generates sweet, sweet rewards that Bonus$aver unfortunately doesn’t offer.
I like how it has a simple $100,000 capacity, instead of the bullshit tiered system banks like to pull (you know, when they say 3% pa!!! in bold but it only applies to amounts above $50,000 or some crap like that), and most of the conditions are clear and fairly easy to meet, but having totally no rewards on the card spend simply maims this product too much to be considered.
It might one day become useful if some sort of credit card apocalypse happens and every card fall below 5% cashback, but let’s not be pessimists here just to overlook the deficiencies of this savings account as it is in today’s climate of 5 to 10% cashback.
- High $100,000 capacity
- Interest isn’t particularly attractive if you don’t spend a lot
- $3,000 salary requirement (instead of most banks’ $2,000) makes it harder for you to split your salary across multiple accounts (if your HR is flexible about such things)
- Opportunity cost is far higher than the interest rate given if you do spend a lot