At the start of 2021, DBS announced upcoming changes for their popular DBS Multiplier Account, that will work from 1 February 2021. Immediately, fans of the DBS Multiplier Account expressed their disappointment.
Before these changes occur, and also to help you determine if you have to change to another bank's high-interest savings account, here's a test of the items the alterations are, and who gains or loses out.
Changes To DBS Multiplier Account From 1 February 2021
Essentially, there's two changes, which we will take a look at one-by-one.
Change #1: Salary Credit will be substituted with the Income category
This new Income category could be fulfilled by either
Salary Credit (via GIRO with regard codes of 'SAL' or 'PAY')
Investment Dividends received (via GIRO from Central Depository [CDP])
It also follows that investment dividends received would no longer count for fulfilling the Investments category.
Change #2: Interest for fulfilling the Income criteria + Transactions in 1 Category are only applied to balances up to $25,000
This is how interest rates are awarded before 1 February 2021:
As you can observe, so long as you fulfil the Salary Credit (soon-to-be replaced by Income) and make transactions in 1 other recognised category (such as Credit Card Spend, Home Loan Instalments, Insurance, or Investments), you'll earn higher interest on your first $50,000 within your DBS Multiplier Account.
Unfortunately, this will be reduced to the first $25,000. People who wish to earn higher interest on their own first $50,000 would now need to fulfil transactions from 2 categories.
Now that we believe the way the new mechanics work, let's take phone winners who would take advantage of the changes – and who'd lose out, when compared to past.
Winners: People Who Don't Draw A regular monthly Salary
In the past, the DBS Multiplier Account doesn't make a large amount of sense for individuals who don't earn a regular monthly salary, such as freelancers, self-employed individuals, or retirees.
By broadening the mandatory base category from merely Salary Credit to Income, which encompasses Salary Credit and investments dividends, more people can fulfil the basic criteria and revel in higher interest from their DBS Multiplier Account.
One way to reliably fulfil the Income criteria every month is to utilise the popular method of building a “Singapore Savings Bonds (SSB) Ladder”, where users buy SSB for 6 consecutive months to allow them to receive dividends throughout the year (since SSBs make coupon payments every 6 months).
Obviously, unless neglect the dividends are huge, you'd need other categories to help make sure the total amount of eligible transactions surpasses $2,000 – otherwise you'll simply be earning 0.05% in interest, regardless of how many categories you have the ability to fulfil.
Winners: People Who Don't Receive Their Salary Via GIRO
In some companies, salaried employees don't receive their salary via GIRO. Instead, they might get a physical cheque, get a bacs via FAST, or even newer payment methods like PayLah! or PayNow.
Just like people who don't draw a monthly salary, this group of users can now make use of the DBS Multiplier Account to earn attractive interest.
Winners: Individuals who Wish to Utilise High-Interest Savings Accounts Using their company Banks
Salary crediting is an common action among high-interest savings accounts that can help you earn bonus interest. For example, the OCBC 360 account awards you with between 1.2% to 2% only for receiving a monthly salary credit.
By expanding the fundamental criteria from Salary Credit to Income, DBS has opened the doors to allow enterprising users to understand more about how they can maximise their interest earned to utilise additional high-interest savings accounts from other banks.
Losers: Individuals who Built SSB Ladders To Fulfil The Investments Category
In yesteryear, these “SSB Ladder” was used to fulfil the Investments criteria. For those who patiently did so and are receiving monthly Salary Credit, their “SSB Ladder” will not be helping them clock Investments category.
To fulfil the Investments category, users would now have to either:
Buy one Trust via DBS/POSB; or
Set-up a Regular Savings Plan via Invest-Saver; or
Make fully settled online “BUY” equity trades via DBS Vickers.
It should go without saying that before making any investments, you need to carefully consider your own risk appetite and just what your investment objectives and time horizon are. If you really wish to invest for the sake of fulfilling DBS Multiplier Account's Investments category, then you might want to pick something with lower volatility, such as a fixed income fund.
Losers: Individuals with A lot more than $25,000 In Balances And just Fulfil 1 Category
In the past, user of the DBS Multiplier Account can enjoy the high interest on their first $50,000 simply by fulfilling the Salary Credit criteria and transactions in 1 other category. The decrease in this towards the first $25,000 implies that this group of users would miss out.
In to benefit from the same interest as before, they would now need to fulfil transactions in 1 more category. When they already have DBS/POSB Credit Card Spend, then the next low-hanging fruit for most of us (that do not intend to take a mortgage loan with DBS or buy insurance from DBS' bancassurance partners) would be Investments.
Calculate For Yourself To ascertain if You're A Winner Or Loser
While some users may bemoan DBS adjusting the way the DBS Multiplier Account works, the changes are not all for the worse. With some meticulous planning, you could still receive similar (if not exactly the same) interest you're accustomed to.
In addition, new users are now able to seriously board the DBS Multiplier Account family, while existing users are now able to explore the potential of using multiple high-interest savings accounts.
It isn't uncommon for banks to revise their conditions and terms. DBS is neither the very first bank to do this, which change is likely not going to be the last. As customers, if we evaluate new changes and find it still makes sense for all of us, even when it is slightly less attractive than ever before, then we're still winners.