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Pros and Cons of the DBS Multiplier Account

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Published on 15.09.2022
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Launched in 2014, the DBS Multiplier Account was the first high-interest savings account in Singapore, providing customers with the flexibility and liquidity of savings accounts while rewarding them with higher interest on their deposits. In response, other local banks followed suit with their own offerings, namely the OCBC 360 Account and UOB One Account.

Eight years on – and many revisions later – let’s take a deep dive into the DBS Multiplier Account and see if it is still a compelling product for keeping your cash savings and short-term deposits.

The Evolution of the DBS Multiplier Account

The DBS Multiplier Account has undergone countless changes over the years. Aside from interest rate revisions, there have also been changes to the types of transactions recognised for bonus interest, as well as enhancements to the features of the account.

When it was first launched in 2014, interest earned was based on the total amount of cashflows achieved in that month. These cash flows include salary credit, investment dividends from one’s Central Depository (CDP), mortgage instalments, and credit card spend. Interest rates on the account ranged from 0.98% to 2.08% on the first $50,000 of balances.

A few years later in 2017, significant quality of life enhancements were made to the Multiplier Account, including aggregating eligible transactions across all DBS/POSB accounts held by the Multiplier Account user and reducing the quantum of eligible transactions for earning bonus interest from $7,500 to $2,000. Total interest that can be earned ranged from 0.05% to 3.5%.

In 2019, the balance cap for earning bonus interest was doubled to $100,000, while the total interest that could be earned was increased to 3.8%. In the same press release, DBS shared that the Multiplier Account also has multi-currency features, allowing customers to exchange, hold, and spend in 12 supported currencies at competitive rates.

In 2020, PayLah! was added as a recognised transaction mode to allow non-salaried workers in the gig economy, retirees, students and national servicemen to earn higher interest with DBS Multiplier.

DBS Multiplier Account in 2022

The DBS Multiplier Account is relatively simple. Interest earned each month is computed based on two factors. 1) The total amount of eligible transactions you clocked; and 2) How much in balances you have in your account.

For eligible transactions, there are three ways they can be computed.

  • Option one: Your eligible for DBS/POSB transactions add up to $2,000 or more every month

    Salary Dividends/ SGFinDex [Expanded] + Credit Card Spend + Home Loan Instalment + Insurance [Expanded] + Investments [Expanded]
  • Option two: Income and PayLah! retail spend add up to S$500 or more every month.

    Salary Dividends/ SGFinDex [Expanded] + PayLah! retail spend
  • Option three: PayLah! retail spend with no minimum spend required (29 years old and below)

    PayLah! retail spend only

Do note that Option 3 is only available to customers aged 29 and below who do not have any income credit, while Option 2 is a fallback if you do not have any transactions that make you eligible for Option 1.

This is because the bonus interest you can earn from Options 2 and 3 is capped at 0.55% and 0.4% respectively, as shown in the table below.

For the majority of customers, especially those who are aiming to earn as much bonus interest as they can, Option 1 would be the way to go.

To qualify, you will first need to either have a salary credit or receive investment dividends from Central Depository (CDP), DBS Vickers Securities, DBS Online Equity Trading, DBS Unit Trusts, DBS Online Funds Investing or DBS Invest-Saver.

Next, you will need to perform between 1 to 3 additional recognised transactions that month, such as credit card spend, DBS home loan repayment, insurance premiums for a DBS-affiliated policy, or making investments through DBS. For more details, you can refer to this exhaustive list of eligible transactions.

By performing the above, the bonus interest you earn ranges from 0.05% to 3.5%, depending on the balances you have in your Multiplier Account and the quantum of the eligible transactions.

Should You Use The DBS Multiplier Account?

Now that you understand how the DBS Multiplier Account works, the first step in evaluating whether it is a good fit for you is to see how much bonus interest you would be earning, given your current income, investments, and spending habits.

Since interest rates change all the time at the bank’s discretion, we would not recommend you deliberately change your mortgage, insurance policies or investment providers solely to get slightly higher interest.

Another point we wish to highlight is the fact that interest earned is calculated daily, based on the end-day SGD balance you have in your Multiplier Account. The entire month’s interest is then summed up and then credited to you.

This means that if you only had $2,000 in your Multiplier Account, and then transferred $98,000 into your Multiplier Account on the last day of the month, you’ll be earning the interest on $2,000 for most of the month, and a pro-rated interest for one day on $100,000.

While theoretically a savings account like the DBS Multiplier provides high liquidity on your funds, you aren’t at liberty to move your monies on a whim if you wish to consistently earn close to the advertised interest rates.

We also note that bonus interest only applies on the first $100,000 of your balances. This means that high net worth individuals who wish to earn more monies on their short-term cash holdings would need to look elsewhere.

Finally, even as DBS themselves made a big deal about raising their maximum interest on the Multiplier Account to 3.5%, savvy investors might point out there are other ways to earn higher returns without having to jump through as many hoops. And those hoops are high indeed, perhaps impossibly so.

To earn the theoretically highest interest bonus interest of 3.5% require you to clock a whopping $30,000 in eligible transactions in a month. To do so, you would need to be earning a lot, as well as spending a lot with your credit cards, home loans, insurance premiums, and/or investments.

Whether such a lifestyle is sustainable throughout the year is also another open question. More realistically, most people would find that they would be earning much less in bonus interest and may struggle to hit 2%.

DBS Multiplier Account Alternatives and Competitors

This brings us to alternatives to the Multiplier Account. On the surface, you could say that DBS Multiplier Account’s closest competitors are the OCBC 360 and UOB One Account, but these high-interest savings accounts have more in common than differences. Learn more about how different savings accounts in Singapore serve you.

They are all savings accounts from local banks that require you to use more of their products and services to earn higher interest, and whose rates are subject to regular revisions depending on the current interest rate environment and how desperate banks are for fresh injections of funds at any given time.

Investors who wish to park their funds in the short-term might look to fixed deposits, Singapore Savings Bonds, or cash management accounts. Each of these options has varying returns and their own limitations.

Fixed deposits in Singapore have not kept pace with the rise in interest rates across the financial sector, and as of September 2022 have not even breached 3% per annum returns across various deposit durations.

Singapore Savings Bonds (SSBs) have been growing in popularity, but due to the demand, the August allocation of SSBs were capped at $9,500. This means that investors with more capital to deploy will need to wait for subsequent months’ allocations to invest more, or look elsewhere. 

Unlike fixed deposits and SSBs, Cash management accounts don’t guarantee returns and offer products with varying risk profiles. As of late-August 2022, indicative returns range between 1.38% to 2.6%. Furthermore, many of these accounts charge management fees of between 0.05% to 0.15%, regardless of the fund performance. 

Disclaimer: 

The information contained herein is provided purely for educational purposes to help users . It is not intended to provide investment, financial, business or professional advice.

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