Cashback Hack: This Hack Can Help A Couple Get S$800 More Interest Per Year
Disclaimer: This article is neither sponsored by Seedly nor DBS. All views are entirely the author’s own.
TL;DR – Cashback Hack
Misconception About Making Money Work For You
Everyone loves interest, the gift that keeps on giving!
Having money in the bank account earns and multiplies itself for you, by just being in there.
Having a high sum of savings can be difficult to achieve with plans in life such as a wedding banquet, house and having children.
While many believe that earning good interest means having a substantial pool of money to start with, this article will prove one wrong with a simple hack.
The Proposal: The CashBack Hack!
Introducing this amazing CashBack Hack:
- It is a combination of the POSB Cashback Bonus scheme and CIMB FastSaver
- This combination allows one to beat almost any other interest scheme!
1. 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.
This is an alternative to the Multiplier Scheme which one can only have one or the other; not both.
Here are the transactions that qualify (You need to fulfil at least 3 of the following categories):
- Salary Credit (0.3%/month, capped at S$20)
- Credit Card Spend (0.3%, capped at $20)
- Home Loan Instalments (3%, capped at $30)
- Insurance (3%, capped at $30)
- Investments (3%, capped at $30)
More details on transactions:
Salary Credit (0.3%/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 yours 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%/month capped at $20)
- This cashback is on top of whatever cashback you are already receiving from the credit card. To illustrate, if you are 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 a 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 2 options for RSP with DBS: (1) ABF Singapore Bond Index and (2) Nikko-AM STI ETF. These are pretty decent RSPs for diversifying your portfolio.
- 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” buying the RSP again by selling all the units of that RSP, and buying it again more than six months after the sale.
Insurance (3%/month capped at $30)
- Only some policies qualify;
- The monthly premium amount recognized is calculated by dividing the annual amount by 12;
- Similar to the Investment transaction, any purchased policy only counts for 12 months. But unlike the investment transaction, you cannot ‘restart’ it.
One can read the Terms and Conditions here.
The distinguishing factor for the POSB Cashback Bonus scheme is that:
- It does not require any savings for you to earn the cashback.
- One can put your savings into another account to earn interest!
- This brings us to the next product, CIMB Fast-Saver.
- CIMB Fast-Saver provides an additional 1% interest per year on savings, on top of one’s Cashback Bonus.
2. Fuss-free Savings Account: CIMB Fast-Saver
Protip: 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 salary credit into another savings account to reap higher interest rates than the 1% from CIMB (e.g. 1.2% for OCBC 360 Account).
The only drawback is that one will have to deal with the minimum account balance. As this is a more complicated option, I will focus on the CIMB option.
Case study of The CASHBACK HACK
I will pit the Cashback Bonus scheme against the Multiplier Scheme, given that the Multiplier Scheme is generally one of the best savings accounts around with its flexibility and high-interest rates.
Scenario 1: A average Singapore who is Single with
- Take home Salary = $2,500
- Credit Card Spend of $200
- Savings of $10,000
|CIMB Fast Saver|
|Total Transactions||$2,500 + $200 = $2,700|
|Interest rate||1.85%||Per month:|
0.3% x $2,500 = $7.5
0.3% x $200 = $0.6
Total per month = $8.1
Per year: $97.2
Note: CashBack Hack wins! Even if the “normal single” were to add investment to boost his Multiplier interest, don’t forget that in such a scenario, he can get $3 in cashback from the investment transaction. CashBack Hack comes out on top again!
Scenario 2: An average Singaporean couple with
- Combined take home Salary = $2,500 + $2,500 deposited into joint account
- Home Loan of $1,500
- Credit Card Spend of $200 each
- Savings of $10,000 each
The calculation will be done for each of the couple first, and the total.
|CIMB Fast Saver|
|Total Transactions||$5,000 + $1,500 + $200 = $6,700|
|Interest rate||2.2%||Per month:|
0.3% x $5,000 = $15
0.3% x $200 = $0.6
3% x $1,500 = $30 (capped)
Total per month=$45.6
Per year: $547.2
|Total Interest as a couple|
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!
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.
Step-by-step guide to adopt this CashBack Hack
To apply, just click the following link and follow the steps.
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.
Seedly Contributor: Zhuang Changzhong
Editor’s note: The above is a really insightful article by Zhuang Changzhong, who is a part of our Seedly community. This hack is really helpful to average Singaporeans to max out the interest earn, with minimum effort.
For readers who are interested in more lifestyle hacks, check out Seedly’s content on Lifestyle!
Check out our blog for more unbiased opinions on your personal finance journey.