Revision of Interest Rates for Standard Chartered Bonus$aver Account from 1 July 2020
By The Boy Who Procrastinates - June 06, 2020
In response to the global declining interest rate amid the coronavirus pandemic, banks are taking the necessary measures to slash interest rate on savings accounts. Standard Chartered Bank ("SCB") is no exception.
Following a recent alteration in April, SCB will be revising the interest rate on the Bonus$aver Account again with effect from 1 July 2020. You may also wish to refer to the circular for more information.
Revision of Interest Rates for Bonus$aver Account from 1 July 2020
- Credit Card Spend: The interest rate earned from monthly spending of $500 on the Bonus$aver card will be reduced from 0.45% to 0.25% p.a. Similarly, the interest rate for the next tier of $2,000 spending will be reduced from 1.45% to 0.75% p.a.
With SCB scaling back on the bonus interest, there is less incentive to spend on the Bonus$aver card which offers no cashback/rewards/miles benefits by itself. Even if you have managed to hit $2,000 monthly spending, the interest rate awarded will be a paltry 0.75%.
Note that the figures might be different from what was advertised on the SCB website as I have excluded the prevailing interest rate for calculation.
Note that the figures might be different from what was advertised on the SCB website as I have excluded the prevailing interest rate for calculation.
- Salary Crediting: The interest rate earned from the crediting of salary will be reduced from 1% to 0.4% p.a.
This is quite a deal-breaker that proves to be detrimental to the interest of account holders. An absolute decrease of 0.6% in interest rate for salary crediting is rather substantial!
- Maximum Account Balance Earning Bonus Interest: The amount of eligible deposit balance earning higher interest will be lowered from $100,000 to $80,000.
Once known for its high balance cap for bonus interest, the size of eligible deposit balance will be shrunk to $80,000 next month, thereby lowering the amount of interest one can potentially earn in a given month.
Impact of Revision on the Interest Rate
The table above shows an overview of the revision to be made to the Bonus$aver Account from 1 July.
For an average account holder who credits his salary, pays 3 bills and spends $500 on his credit card, he will be receiving a mere 0.8% on the Bonus$aver Account, half of the current 1.60% interest rate. Coupled with the reduced balance cap, the maximum interest that one may potentially earn will decline by 60%!
In my opinion, this upcoming revision will deliver the coup de grâce as the Bonus$aver Account will be offering less than 1% interest rate, which does not commensurate with the effort taken to fulfill the various requirements.
For an average account holder who credits his salary, pays 3 bills and spends $500 on his credit card, he will be receiving a mere 0.8% on the Bonus$aver Account, half of the current 1.60% interest rate. Coupled with the reduced balance cap, the maximum interest that one may potentially earn will decline by 60%!
In my opinion, this upcoming revision will deliver the coup de grâce as the Bonus$aver Account will be offering less than 1% interest rate, which does not commensurate with the effort taken to fulfill the various requirements.
Amidst the global coronavirus pandemic, we may be witnessing prolonged period of low interest rates globally. Whilst the Bonus$aver Account has lost its allure as a high-yielding savings account, the implementation of interest rate cuts by other financial institutions may well be undertaken in the near future.
Comparison with other Active Savings Accounts
When set side by side with other active savings accounts, the effective interest rate offered by the revised SCB Bonus$aver Account has considerably paled in comparison.
At this point, the BOC SmartSaver offers the best bang for the buck at 2.35% effective interest rate. UOB One Account is still offering a decent 1.8% even after the recent change in May.
The OCBC 360 Account will no longer retain its competitive edge with the upcoming revision. Kindly note that the indicated interest rate in the chart above is the revised rate in July.
Before scurrying to set up new savings accounts with the higher interest rate, one should be mindful that impending interest rate cuts by banks might be inevitable with the low interest rate environment.
Comparison with other Savings Instruments
- Singapore Savings Bonds: Using the data of the July 20 issue, the interest rate for first 2 years is a pittance of 0.30%. The minimum investment amount is $500 for each issue.
- Fixed Deposits: If you do not mind forgoing liquidity, UOB currently provides the highest interest rate of 1.60% on a 24-months fixed deposit with a minimum placement of $5,000. For a shorter period of 12 months, ICBC is offering 1.25% with a minimum placement of $500.
- CIMB FastSaver Account: A fuss-free savings account that gives 1.325% on the first $100,000 balance which appears to be an attractive alternative to active savings accounts. But its sustainability is anybody's guess, especially in the current low interest rate environment.
- Citi MaxiGain Account: Taking 1-month SIBOR to be at 0.248, the base interest is calculated to be 0.12%. The bonus interest can reach a maximum of 0.6% after 12 months of stepping up. Hence, the total interest rate sums up to be 0.72%.
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Disclaimer: Kindly note that this is not a sponsored post. The author is in no way affiliated with the stated financial institution and does not receive any form of remuneration for this post. The Boy who Procrastinates has compiled the information for his own reference, with the hope that it will benefit others as well.
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