Cashback Hack: This Hack Can Help A Couple Get $900 More Interest Per Year

Everyone loves interest, the gift that keeps on giving!

Having money in the bank account earn interest and multiply itself for you seems like a great idea.

You don’t really have to do much, just credit your salary and let time (and interest) do the work.

But what if you need a huge amount of savings for big-ticket items in life like a wedding, house, or having children?

Many would think that earning a high amount of interest would only be possible if you have a substantial pool of money to begin with.

However, there’s a simple way to go about this with one simple hack!

Disclaimer: This article is neither sponsored by CIMB or DBS/POSB. All views are entirely the author’s own.

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TL;DR: The Cashback Hack That Gives a Couple $900 More Interest a Year

Let’s assume that you’re an average Singaporean couple with the following financial situation:

• Combined monthly take-home salary: $2,500 + $2,500 (deposited into joint account)
• Monthly home loan instalment: $1,500
• Monthly credit card spend: $600 + $600
• Savings: $10,000 + $10,000

Many know that using a DBS Multiplier account gives you higher interest as compared to a regular savings account (0.05%).

To be exact, you’ll be earning $197.10 interest each.

Or a total of $394.20 interest, from the 2% per annum interest using your individual DBS Multiplier account (since joint accounts are not applicable for the Multiplier scheme).

BUT!

If you used POSB Cashback Bonus and CIMB FastSaver on qualifying transactions as a couple, you can get $900 more in cashback/interest every year:

Note: Don’t be discouraged if you’re single and don’t have a home loan to pay off, your insurance and investments may be considered as qualifying categories too!

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What Do We Need Before Making Use of the Cashback Hack?

The CashBack Hack that I’m going to introduce you to:

• Is a combination of the POSB Cashback Bonus scheme and CIMB FastSaver account
• Is a combination which allows you to beat almost any other bank account’s interest rate

Note: remember to read the terms and conditions for all the various accounts and cashback bonuses to fully understand what you’re getting into before making the switch!

If you’re already super familiar with how the POSB Cashback Bonus and the CIMB FastSaver account work, you can teleport to the hack directly!

POSB Cashback Bonus

POSB gives you 0.3% to 3% interest (or in their words, “cashback”) based on your transactions instead of your savings.

Like regular interest, you will get your cashback monthly.

The qualifying transactions are similar to the Multiplier Scheme.

But you need to fulfil at least three of the following categories to qualify for the POSB Cashback Bonus.

Here are some important terms and conditions to take note of:

Salary Credit (0.3% per month capped at $20)

• Minimum salary credit by GIRO of $2,500
• Transaction reference codes must be either ‘SAL’ or ‘PAY’, and reflected as either ‘GIRO Salary’ or ‘Salary’ in your statement of account
• If you and your spouse’s salaries are credited into a joint account, you will both get cashback on the combined amount!

Credit Card Spend (0.3% per month capped at $20)

• This cashback is on top of whatever cashback you are already receiving from your credit card. For eg, if you’re already receiving 5% in cashback on your DBS LiveFresh card for online spend, your total cashback is now 5.3%!
• There is no minimum monthly spend required (even $1 qualifies!) 
• Your expenditure is calculated based on calendar month

Home Loan instalments (3% capped at $30)

• Home loan with DBS, whether existing, new, or refinanced loan
• Both the Cash and CPF components of your loan are considered
• All joint borrowers (up to 3) can earn cashback on the full amount

Investments (3% capped at $30)

• Two ways to get cashback from investments: (1) Lumpsum investing and (2) Investing through the DBS Invest-Saver regular savings plan (“RSP”). I have only explored RSP so I will only focus on that here.
• There are two options for RSP with DBS (both are pretty decent RSPs for diversifying your portfolio):
  • (1) ABF Singapore Bond Index
  • (2) Nikko-AM STI ETF
• You will only receive cashback on your chosen RSP for 12 months. After that, you stop receiving cashback and it stops counting as an eligible transaction. This is a problem if it is one of the 3 transactions that is needed to qualify for cashback bonus.
• You can “restart” by selling all the units of your RSP and buying it again more than six months after the transaction

Insurance (3% per month capped at $30)

• Only some policies qualify
• The monthly premium amount recognised is calculated by dividing the annual amount by 12
• Any purchased policy only counts for 12 months (but unlike investments, you cannot ‘restart’ this)

The main advantage of using the POSB Cashback Bonus scheme is that it does not require any savings to earn the cashback (which means you can put your savings into another account to earn higher interest eg. CIMB FastSaver on top of the cashback.

CIMB FastSaver Account

Before switching to a bank account, many would wonder if it is worth the hassle.

And whether you’ll need to fulfil multiple categories in order to qualify for the higher interest rate.

Well, CIMB FastSaver is probably the closest you get to a fuss-free higher interest savings account as you only need to maintain a minimum deposit of $1,000 to enjoy the following interest rates:

Pro-tip: If you have a spouse and either one of you earns so much that it maxes out the cap for Salary Credit, you can consider having the other party credit their salary into another savings account to reap even more interest!

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How Does the Cashback Hack Work?

To illustrate how useful this Cashback Hack is, I will be pitting it against the DBS Multiplier Scheme (which is generally considered one of the best savings accounts around with its flexibility and high-interest rates).

Scenario 1: An Average Singapore Who Is Single With

• Monthly take-home salary: $2,500 
• Monthly credit card Spend: $600
• Investments = $300
• Savings = $10,000

Result: Cashback Hack wins! Although you’ll have to “restart” your investments since the cashback is only eligible for the first 12 months…

Scenario 2: An Average Singaporean Couple With

• Monthly combined take-home salary: $2,500 + $2,500 (deposited into joint account)
• Monthly home loan Instalment: $1,500
• Monthly credit card spend: $600 + $600
• Savings: $10,000 + $10,000

I’ll be calculating how much interest each individual (in the couple) gets first.

Since joint-accounts are not under the DBS Multiplier Scheme:

Note: For a “normal” couple without much savings, we can see that CashBack Hack is really by far the better way to earn “interest”. You can do your own calculations, but take it from me that even if you swap out the DBS home loan for investments in this scenario, the CashBack Hack will still win!

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Bonus: CashBack Hack Equation

For the more mathematically inclined, you can use the following equation to find out how much Cashback Bonus you need to earn each month to equal the multiplier account:

Benefits of This CashBack hack

• You don’t have to maintain a consistent pool of cash in your bank account to earn interest rates. This is especially important if your cash-pool fluctuates due to commitments such as a wedding/housing/children;
• You don’t have much savings. Newly grads, Newly weds, and Newly dads (and mums) may not have much savings and therefore feel compromised or incapacitated when it comes to earning interest. Not anymore with the Cashback Hack!
• You don’t like to jump through hoops to get your savings. For some savings accounts, you have to spend a certain amount on your credit card to “unlock” interest rates. Not anymore! With the CashBack Hack, even an expenditure of $1 can work.
• You can really exploit the CashBack Hack by having a joint account and jointly crediting your salary into the same account!

Drawbacks of This CashBack Hack

• The easiest three transactions are 1. Salary credit, 2. Home loan, and 3. Credit card. But not everyone has a DBS home loan, or wants DBS to be the bank servicing their loan.
• If you don’t have a DBS home loan, you can use the Investment transaction instead. But this is tricky because you have to monitor and sell off all your units every 12 months to “restart” your investment and have it count as an eligible transaction again. 

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Step-By-Step Guide to Adopt This CashBack Hack

Adopting this Cashback Hack is super simple if you’ve already have a DBS/POSB account:

• Log in with your internet banking details
• Under the ‘Request’ tab, select ‘Opt in Bank & Earn Programme”
• Select ‘Instant Enrol’ for POSB Cashback Bonus
• Select Account to Receive Cashback
• Confirm and Submit your Request

Do note that if you already have a Multiplier account, you will have to cancel that scheme and switch to the Cashback Bonus scheme. BUT the bank account will still be there; it will just be converted into a regular multi-currency account.

The (Key) Points:

• This is an alternative to the Multiplier scheme; you either get ‘interest’ based on your transactions with DBS or based on the savings in your DBS account
• You can park your savings in a fuss-free savings account, such as the CIMB FastSaver
• You need at least 3 transactions to qualify for cashback
• Credit card expenditure of $1 also qualifies as 1 transaction out of the required 3 transactions
• Insurance and investment transactions only last for 12 months
• It is much more effective to CashBack Hack with your spouse, where you can both benefit from your DBS home loan if any, and jointly credit your salary into a joint account. 

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Seedly Guest Contributor: Zhuang Changzhong