Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Wednesday, 22 June 2016

POSB New Savings Plan for NSF a Good Deal?

Is the new savings plan rolled out by POSB a good deal for NSF?
We went through some of the terms and conditions of the POSB to give you a full picture and the things you need to know about it!

The new Savings Plan, known as POSB Save As You Earn (SAYE) aims to help NSFs earn more interest on their savings and enjoy cash rebates when they spend money.

NSFs will earn
1) 2% interest (per year) on their savings for the first 2 years
2) 2% cash rebate on local MasterCard contactless transactions

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Terms & Conditions for earning 2% Interest
1) Credit your monthly NS allowance into your bank account that is linked to POSB SAYE account
2) Transfer a minimum amount of $50 each month into your POSB SAYE account

Terms & Conditions for earning 2% cash rebate
1) 2% cash rebate on all local MasterCard contactless transactions
2) 1% cash rebate on online transactions
3) 0.3% cash rebate on all other retail transactions
No minimum spending required for NSFs
Also, as long as you own one of the cards (HomeTeamNS-Passion-POSB Debit Card or SAFRA DBS Debit Card), you are automatically eligible for the cash rebates.

When can I apply for one?
You can apply once you received your first NS allowance.

Things You Should Know

1) Interest Disbursement
The 2% interest earned is accumulated for 12 months and released all at one go.
This means if you sign up now (June), you only receive the first year interest payment in June 2017 and the second year interest payment in June 2018.

2) Income Qualified for 2% Interest
The 2% interest is only for months where you receive a NS allowance.
This means if you are near ORD date, you do not really have a lot of time to earn the 2% interest. This will be just like another one of your savings account.
On the other hand, if you are going to enlist or just enlisted, you have a longer period to earn the 2% interest.

3) Savings Limit
You must deposit a minimum of $50 and a maximum of $3,000 into your POSB SAYE account every month.
You can set the amount and the date you wish to do the monthly transfer. You can also adjust the amount of money you wish to contribute each month

4) Forfeiture of Accumulated 2% Interest
We think this deserves a big note and attention!
At any point should you make an withdrawal from the POSB SAYE account, you will
1) earn only the base interest for that month's balance and;
2) lose all your previously earned 2% interest.
Example:
You open POSB SAYE account on July 2016. You accumulated the 2% interest all the way till May 2017. On May 2017, you made a withdrawal from your POSB SAYE account. 
For the month of May, you will earn the base interest on your account balance. 
In additional, you will lose all the 2% interest you have earned from July 2016 to April 2017.
You will continue to earn 2% interest in June 2017 if you still met the criteria.

5) Cash Rebates are NOT real cash
The cash rebates you get from your spending is not actual cash credited back into your account.
Instead, HomeTeamNS$ and Safra$ are credited into your Card Account and can be spent at all HomeTeamNS and Safra clubhouses and participating merchants.

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Our Take
If you are going to enlist or just enlisted, it is recommended that you open this account.
While you might withdraw money from this account, should you not withdraw a single cent from this account, you get to earn a bonus 2% interest!

Or, instead of saving your money (which most likely you will not have a lot of it), it might be better to transfer your parents' money (if they have plenty) into this account to earn the 2% interest.
DO take note however that the money they transferred in cannot be taken out during the 12 months period, if not the 2% interest will be forfeited!
Assuming you put in $3,000 every month into the account from the start of your NS journey, by the end of your 2 years, you would have put in $72,000 and earn an accumulated interest of $1,537.5!
Kind of works like a Fixed Deposit I would say.


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