$$$ KPO and CZM $$$: DBS Multiplier + SSBs + Joint Account = Higher Interest!

Monday, April 16, 2018

DBS Multiplier + SSBs + Joint Account = Higher Interest!

Some of the readers might know that we have changed our bank accounts from OCBC 360 to DBS Multiplier when it was revamped last year and I blogged about it here - Free $5 for DBS Multiplier Account Holder. The free $5 is still available (until 30th June 2018)!


In my opinion, the DBS Multiplier is by far the most generous bank/account when it comes to fulfilling/meeting the various defined categories (credit card spend, home loan, insurance and investments). Firstly, it awards you for having a higher salary and there is even a way to double it through the use of joint account! I shall elaborate further later. Next, it does not encourage spending, even a $1 credit card spend will mean that one can meet that category (proven - this is what CZM has been doing).


Last but not least, all/most of the investments category (e.g. OCBC 360 and SCB Bonus$aver) has been a scam which requires you to either purchase an eligible insurance product or invests in a unit trust with them - things which we will never do. Naturally, we dismissed the investments category for the Multiplier account when we first signed up for it. It turns out that the investments category can be met simply from dividend crediting from CDP. With this knowledge, I came up with a theoretical way (not proven yet, we will only know 7 months later. lol) to increase our interest!

Step 1
Open a joint account with your spouse/another half (If he/she does not exist, you can skip to the next step or find one quickly. Hahaha). You should have 2 Multiplier accounts + 1 joint account.


The reason for having a joint account is because the total salary credited to the joint account will be considered as a salary credit for the Multiplier account. This could potentially bump the couple up to the next category (e.g. ≥S$2,500 to <S$5,000 to ≥S$5,000 to <S$15,000) which gives more interest! Furthermore, with 2 Multiplier accounts, the cap for the bonus interest is essentially doubled to $100k. One thing to take note of is that the joint account should only be used as a "pass through" account. Keep the minimum balance (we are looking at POSB Everyday Savings Account with $500 minimum balance) needed and transfer the relevant amount/salary to the Multiplier account because the interest awarded is based on the balance in the Multiplier account only.

Step 2
Build a bond ladder using 6 SSBs (Singapore Saving Bonds). Bonds pay a fixed coupon (similar to stocks paying dividends) at fixed interval and has a maturity date where one can get back the principal/invested value. A bond ladder is made up of multiple bonds that pay coupons at different intervals with different maturity dates. This is a more conservative strategy/form of passive income for retirement. This is just a quick introduction, do read up more on bonds elsewhere!


I believe everyone should be familiar or have at least heard of SSB. It is issued/backed by our government and unlike the normal/actual bond, it will not be affected by the rising interest rate environment. Bonds typically trade like stocks with buy and sell price and its price will fall when interest rate increases but you do not have to worry about that with SSB. The minimum investment per SSB is $500 and the transaction cost is only $2. To build a bond ladder, simply buy a $500 SSB for the next 6 months. Since the SSB pays coupon/interest every 6 months, you will receive dividend crediting every month for the next 10 years! lol. You will also need to go to the SGX CDP portal and ensure that the account specified in the Direct Crediting Service is the joint account.

Having said that, is it really worth the effort? The answer is it depends! I have build a simple calculator for you to compute the difference in interest. Simply modify the deposit you have, the monthly transaction (total salary credit + estimated credit card spend) and let the formula do the magic! To simplify the computation, I have made some naive assumptions:
- Invest the minimum ($500) to SSB
- The deposit is kept constant
- The T&Cs of the Multiplier account will remain the same (we have all seen/experience how the different banks change the interest rate awarded or the T&Cs)

Here you go - KPO Calculator for Multiplier + SSB

Let me know what are your thoughts :)

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17 comments:

  1. This method works.
    I've been buying SSB over the last 2 years as a form or retirement handout for my parents when they retire.

    Since the opening of my multiplier late 2017, I've been fulfilling 2 categories with my SSB interest and credit card spending.

    I'm currently outstation but I still uses my credit card for a 0.50eur per month.
    I can verify that I'm still getting an interest rate of more than 2% every month.

    Great post. Great sharing.

    Thumbs up

    ReplyDelete
    Replies
    1. Hi ZhanQing,

      Thank you for the confirmation! Looking at the FAQ, we are both pretty sure it will work too. Hahaha.

      Thank you for the kind words, glad that you enjoyed the article :)

      Delete
  2. Replies
    1. Welcome! Need to find alternative to recoup Thaibev losses. Hahaha.

      You can use this strategy with your mum for higher interest!

      Delete
  3. Hi. Nice tip. The SSB should be credited into joint account or multiplier?

    ReplyDelete
    Replies
    1. Hi KY,

      The interest/coupon from SSB should be credited into the joint account as well. You can do that by signing into the SGX CDP portal and change the account for the Direct Crediting Services :)

      Delete
    2. Thanks. So just need 1 CDP account? Time to sign up for next bond exercise.

      Delete
    3. Yeah. Technically both CDP also works but consolidate to 1 account easier.

      Take note of the dates if you are applying for May SSB!
      Closes: 9.00pm, 25 Apr 2018
      Results: After 3.00pm, 26 Apr 2018

      Delete
  4. The minimum balance for a joint account is $3000 instead of $500. The dbs person said that's the only one that they are offering now.

    ReplyDelete
    Replies
    1. Hi Aloysius,

      Technically, the DBS person is not wrong. lol. You will have to ask for any of the POSB savings account:
      - POSB eSavings Account
      - POSB Everyday Savings Account
      - POSB Passbook Savings Account

      Unfortunately, not everyone is proficient/familiar with the products the bank is offering.

      Delete
  5. Can i just check with you which credit card are you using in tangent with this strategy? Most of the credit cards have an annual fee of 192 per annum. Possible to waive annual fee based on your spending?

    ReplyDelete
    Replies
    1. Hi Lemon,

      Any DBS credit card will do! It depends on whether you belong to the cashback camp or the miles camp. lol.

      Cashback - DBS Live Fresh Card (I maybe wrong because I do not belong here)
      Miles - Woman's Card or Altitude

      Yes. So far, I only paid for annual fee that give miles/points in return. The annual fee for my other credit cards are always waived.

      Delete
  6. Hello, just curious how can fresh graduate who just started working take advantage of the DBS multiplier interest rate? Don't think they can't apply for a credit card yet. Or is there other account more suitable for them?

    ReplyDelete
    Replies
    1. Hi lilac lover,

      Once you receive your first month payslip, you will be able to apply for a credit card. That was what I did :) My first account was OCBC360 when I graduated and that account requires credit card spending too.

      I am not too sure if there is any more suitable account because the way people earn/save/invest/spend are very different. You got to decide for yourself. For a start, you can read this Seedly article - https://blog.seedly.sg/best-savings-accounts-2018/

      Hope this helps :)

      Delete
  7. Hi! Do you mean the salary does not have to be credited to the Multiplier account itself but just any other POSB/DBS account? Also, the minimum spending on credit card - will that work on debit cards? Or do I have to get a credit card no matter what? If it works on Debit card, do I have to link my card to my multiplier account?

    Thanks!

    ReplyDelete
    Replies
    1. Hi Zhiting,

      First question - Yes!
      Salary credited via GIRO into any personal or joint DBS/POSB deposit account. The main description in your Statement of Account should “Salary” or “GIRO Salary”.

      Second question - No!
      Unfortunately, it has to be a DBS/POSB credit card with you as the principal card holder.

      Hope this helps :)

      Delete