I simply Finished University. Here's Why I Decided To make use of The DBS Multiplier Account

The DBS Multiplier account is a savings account that allows you to earn up to 3.8% interest rate per year. The opening of a DBS Multiplier account may also be done online, saving you both a visit to the bank along with the time spent waiting for your turn.

Here's a fast summary of how the DBS Multiplier works:

Source: DBS

Compulsory requirement:

A) Salary crediting

Optional transactions that contribute to a greater rate of interest:

B) Charge card Spend (using a DBS/POSB credit card)

C) Home Loan Instalments

D) Insurance

E) Investments

The interest rate you get first requires your salary to become credited into a DBS/POSB account (this doesn't need to be the DBS Multiplier account). Just how much you get in interest rates are calculated based on the quantity of transactions you are making that month, as well as the amount that was transacted.

How The Interest Rate Is Calculated

The DBS Multiplier Account gives you a greater rate of interest for additional transactions completed with DBS/POSB. For example, crediting your salary and making transactions in 2 categories or more categories will get you more interest when compared with crediting your salary and only carrying out 1 transaction.

However, the more transactions your make doesn't necessarily equal a higher rate of interest as making transactions in 3 different categories gets you an identical interest rate as making transactions in 4 different categories – unless having more transactions add up significantly to bump you into the next tier under “Total eligible transactions per month”.

Source: DBS

The rate of interest is used towards the average daily balance inside your DBS Multiplier account. This means that gradually alter keep as much money as you possibly can in your DBS Multiplier account to earn more in interest. Since this interest rate is used to end-day balance, this implies that you should attempt your best to transfer your funds to your DBS Multiplier account as soon as possible.

For example, in case your salary is credited around the 25th from the month to another DBS/POSB account, you should transfer the funds to your DBS Multiplier account around the 25th rather than the last date from the month to ensure that the interest rate is applied to a greater balance now that your wages are included inside.

What I Like About It

#1 Targets Are Reasonable And Easy To Hit

Salary crediting: No effort needed on my end, since I just need my employer to credit my salary into any of my DBS/POSB accounts and it'll be recognised for the salary crediting component under the code SAL/PAY, though cheques won't count.

Credit card spend: Again, another low effort component as there is no minimum spend. This means I can just spend less than $2 for my morning coffee which criteria will already be met.

This makes it extremely easy to hit the fundamental dependence on salary credit + transaction in 1 category. The interest minute rates are also attractive even if only one transaction is made. For many fresh graduates, this could probably translate into about 1.85% interest p.a.

#2 Encourages Investing

With the investments component as one of the criteria for bonus interest, it encourages teenagers to begin investing. For teenagers that have already begun investing, it makes you put more thought into your investments as not every investments will be considered under this category.

There are 3 methods to satisfy the investment transaction component:

1) Dividends out of your CDP: Much like your salary credited, the dividends does not need to directly go into your DBS Multiplier take into account so that it is recognised. This dividends may come from the stocks you are currently holding.

2) New purchases of unit trusts: Only purchases of unit trusts made following the opening of your DBS Multiplier account will count for the investment component. Unit trusts that were purchased before creating your DBS Multiplier account won't count.

3) Purchasing of shares using your DBS Vickers account: When utilizing DBS Vickers hitting your monthly investment transaction, only fully settled 'BUY' trades are recognised (i.e. 'SELL' trades are not recognised).

It offers 3 various ways for investors to meet an investment criteria. For a lot of new investors, first of all , can be achieved together with opening your DBS Multiplier account would be to buy a Unit Trust Regular Savings Plan or POSB Invest-Saver.

This requires less than $100 per month to begin neglect the journey. Furthermore, you stand to help the next 12 months as your monthly contributions is going to be recognized under the investments transactions component.

For investors which have already purchased unit trusts, you can still satisfy the investments component during months in which you receive dividends out of your stocks or by collecting shares making use of your DBS Vickers account.

#3 No Minimum Invest in Credit Card

Credit card spending component does not require the absolute minimum spend. What this means is I don't have the worry of getting to invest more just to make sure I satisfy the credit card spend criteria.

This also allows me to make use of other charge cards outside of DBS/POSB. This really is something which is becoming increasing important as there are many other credit cards to make use of, with different perks.

#4 Recognises These Transactions Across Accounts

The transaction aspects of the DBS Multiplier do not require it to be done directly into/out from the DBS Multiplier account itself.

This implies that my salary credited into another DBS/POSB savings account (that is not the DBS Multiplier) is still recognized as the salary credit component for my DBS Multiplier account. This protects the problem of having to approach your HR to request these to change the account your salary is currently credited into, towards the DBS Multiplier account.

The same applies to the dividends that you receive from your stocks. There's no need to change the account that CDP credits your dividends to so long as these days it is a DBS/POSB account.

#5 Easy And Clear Tracking

Bank & Earn Summary (Before 1 May 2021 updates)

Bank & Earn Summary (After 1 May 2021 updates)

The Bank & Earn Summary section gives you: 1) an instantaneous overview of the constituents you've hit for the month, 2) how much was transacted for the reason that category as well as 3) the interest rate you'll be getting. This makes it simple to keep track of just how much you've transacted for that month in addition to which interest band you come under for your month.

At no more the month, DBS also sends an SMS to show you the amount of interest you have earned for your month along with the rate of interest which was applied. This is a nice touch because it helps to ensure that you know how much interest you earned that month, particularly when many transactions in your banking account are often overlooked.

#6 Couples can function together to obtain higher interest rates

Besides having individual DBS Multiplier accounts, couples can create a joint account with DBS/POSB. By crediting both parties' salaries in to the joint account, this can help you and your partner fulfill the salary crediting component of the DBS Multiplier even if just one party receives a salary that month.

It also potentially bumps both your interest rates in to the next tier as both your salaries are combined and recognized as salary credited, allowing the two of you to hit the following tier of the DBS Multiplier.

Limitations To The Multiplier Account

#1 Investments Component

For investors like myself which have already started a regular monthly investment plan just before opening a DBS Multiplier account, unfortunately, the system trust won't be recognized under the investment section. This can be a pity because when you are doing some form of investing, it remains unrecognized by the bank unless you purchase a new unit trust.

Even for brand new purchases made after opening your DBS Multiplier account, the monthly contribution amount for the unit trust will be recognised only for the first 12 consecutive contributions. This means that after the first year, this monthly investment contribution amount will not count towards your investment transaction component.

However, the dividends you obtain from the unit trust will always be recognized throughout the months that you receive the dividend.

#2 Bar to hit to get higher interest on the next $50,000 is very high (after the first $50,000)

Previously, higher interest rates were only applicable as much as the very first $50,000 inside your DBS Multiplier Account, which resulted in anywhere more than $50,000 is going to be accorded with the prevailing rate of interest of 0.05%.

As of 1 May 2021, the features of the Multiplier Account happen to be revised. Now you can continue to $100,000 in your account to obtain higher interest rates. However, the bar to hit to get higher interest rates for the following $50,000 in your account is very high. To be eligible for a higher interest rates in your next $50,000 you will need to credit your salary and transact in at least 3 categories.

This means that besides crediting your salary, paying for a DBS/POSB charge card and investing, you now have to either 1) take up a home loan with DBS or 2) purchase an insurance plan from DBS after opening a Multiplier Account. The monthly instalment for your house loan along with the monthly insurance premium amount will be recognised under the respective transaction categories.

The Multiplier Account advertises the maximum interest rate of three.80% per year. However, in order to get this 3.80% p.a. interest rate, your overall eligible transactions within the month needs to total at least $30,000, a very large amount of cash for many Singaporeans to become transacting each month.

Still The very best Account (For Now)?

While advertised as an account that that rewards rates of interest as high as 3.80%, realistically, many people would end up receiving something around 1.80% – 2.20% p.a, an extremely attractive interest rate. To place things into perspective, let's imagine you have $50,000 in your DBS Multiplier account and earn 2% rate of interest for those 12 months. This really is near to $1,000 in annual interest earned!

It's also great that it's user friendly, with transaction requirements being straightforward and relatively simple to hit. However, upon reaching the $50,000 mark, it is very likely which i will still use using another account while leaving the $50,000 inside the DBS Multiplier account, unless I have intends to find a mortgage loan with DBS or insure with DBS.

All in most, a great checking account for young working adults.