DBS Multiplier Account: What Are the Changes in 2020? Are They Beneficial for Me?
The DBS Multiplier Account has always been one of the most popular savings accounts around.
But with new changes come February 2020, it may no longer be as attractive as before.
For those who aren’t kept in the loop, here are the changes to the DBS Multiplier account in 2020, and the pros and cons that come with it!
TL;DR: Changes To DBS Multiplier From 1 Feb 2020
|Before 1 February 2020||From 1 February 2020|
|Salary Credit||Must be credited via GIRO, with transaction reference code |
'SAL or PAY'
|Will be renamed to income category instead, and will be made up of:
1) Salary Credit: Must be credited via GIRO, with transaction reference codes SAL or PAY.
2) Dividends: Must be credited via GIRO, fromCentral Depository Pte Ltd (CDP)
|Dividend Credit||Qualify under Investment Category||Will be qualified under Income Category instead|
|Balance cap for Salary Credit + transactions in 1 category||Higher interest is applied for balances up to S$50,000 only||Higher interest will be applied on balances up to $25,000 only.|
What does this mean to users?
- Dividends from stocks, bonds, SSB, or any other investment products will now be credited under the income category instead of the investment category. Do note that dividends from non-SGX listed counters are not recognised by DBS.
- This means that freelancers without a part-time/full-time job for salary credit can now direct their investments to their income category, potentially earning higher interest rates.
- Investments eligible for Multiplier Account include:
- Purchase of a unit trust via DBS/POSB
- Setting up a Regular Savings Plan via Invest-Saver
- Fully settled online ‘BUY’ equity trades.
- If you fulfill the salary credit + 1 category of transaction, interest is applied on only $25,000 instead of $50,000.
- If you satisfy 2 spending categories: salary credit + transactions in 2 categories, bonus interest is applied to $50,000.
Pros: Who Will Benefit From These Changes?
Good For Those Who Don’t Qualify For Salary Credit Previously
As mentioned above, freelancers and self-employed individuals who previously didn’t qualify for salary credit will now be able to earn bonus interest rate from the income category via crediting their dividends from investments into their DBS Multiplier account.
This works best if you have a consistent monthly dividend income.
Do note, however, that to qualify for higher interest rates, these transactions (crediting your dividends, etc. will have to amount to more than $2,000.)
Cons: Who Will Be Negatively Affected By These Changes?
Changes Are Bad For Those Who Transact Only In 1 Category
If you satisfy the minimum salary credit and 1 more category of transactions, the amount of interest you can earn is halved. (This applies to people with $50k in their bank.)
This is not good if you have more than $25,000 in your Multiplier account, as the higher interest rate will only apply to the first $25,000.
Lower Interest Rates For Those Using Dividends To Fulfil Investment Category
The investment category in the DBS Multiplier account used to be recognized for bonus interest in the past. This is set to a limit- where you can only get bonus interest on your insurance/ investment dividends for 12 months before it is no longer considered a ‘multiplier action’.
Now with the new changes, dividends will not be accounted for in the investment category but are now considered under the ‘income category’, so for working adults who already have a monthly salary credit, you will no longer be getting bonus interest for your dividend via DBS Multiplier.
So for example, if you just satisfy the minimum salary credit, and the 1 category of transaction you’re banking on is dividends, your interest basically falls back to 0.05%.
Is It Still Worth Opening A DBS Multiplier Account?
Previously, the DBS Multiplier account is definitely one that’s catered for people with a regular paycheck, because salary credit is compulsory.
With the new changes, the Multiplier account gives self-employed, freelance, and retired individuals a chance to earn a higher interest rate based on their passive income earned through dividends.
If you are in the latter category, then the DBS Multiplier account might be something that you can consider.
For everyone else, whether this change is welcomed really depends on your individual profile, and what you invest in.
As a fresh graduate who’ve just started looking for the best savings account to park what little I have, it’s definitely harder for me to be able to meet the various requirements in order to qualify for the bonus interest rates.
Especially since I don’t have a DBS/POSB credit card to fulfil the 1 transaction category.
For those who are gunning for higher interest rates and want to find out how to maximise your earnings, be sure to check out our Seedly Community’s DBS Multiplier account reviews!