Citibank Singapore is offering a savings account with higher interest that differs from your other “higher interest” savings / current accounts like the OCBC 360 or the UOB Account. You don’t have to credit your salary or spend a certain sum in your credit card in order to earn a higher interest.
The catch? Well, your balance in the account should keep increasing or stay the same from the previous month. It sounds like a tall order but the concept is simple.
The account has a base interest component which is 80% of 1 month SIBOR (you can check the rate HERE). For the past several months, one month SIBOR has held at approximately 1% so 80% of that is around 0.80% p.a. To earn this, you just need to maintain at least S$10,000 in the account.
Next, there is a bonus interest component which starts at zero during the first month and steps up by 0.10% p.a. by each month. This means that by the 13th month, you can potentially end up with 1.2% pa of bonus interest. Add the two together and your maximum possible interest rate with the Citi MaxiGain Savings Account is approximately 2% p.a. Not bad for a savings account.
To make sure your bonus interest keeps increasing (til you reach the cap after 12 months), you just need to make sure your daily balance at any point in time in a month should not go below your lowest balance in the previous month. If your balance in any day of the month falls below your balance from your previous month, your bonus interest resets to zero and you will just earn the base interest.
The account also has a special feature whereby after the 6th month of step-up bonus interests (i.e. the month you get 0.60% p.a. interest), you are then basically free to make withdrawals. The bonus interest will be floored at 0.60% p.a. rather than resetting to zero. Adding the base interest (and assuming SIBOR stays the same), this means your total effective interest will be floored at around 1.4% p.a. after you’ve reached the 6th month of step-up bonus interests.
I am not putting any scenario analysis here but the Citi website has a couple of illustrations.
Citi MaxiGain vs. OCBC 360 vs. UOB One vs. Standard Charted BonusSaver
|Product||Maximum Interest||Conditions for Maximum Interest||Maximum Balance That Can Earn High Interest|
|Citi MaxiGain||2% p.a.||Balance must stay the same over previous month or keep increasing||S$ 150,000|
|OCBC 360||3.05% p.a.||Salary credit, bill payment, credit card spend, purchase of investment or insurance products||S$ 70,000|
|UOB One Account||2.43% p.a.||Credit card spend and either salary credit or bill payment||S$ 50,000|
|Standard Chartered BonusSaver||3.88% p.a.||Card spend, bill payment, salary credit, investment / insurance||S$ 100,000|
|Bank of China Smart Saver||3.55% p.a.||Card spend, bill payment, salary credit||S$60,000|
In summary, the Citi MaxiGain is not the highest earning of the “high” interest savings accounts in the market today but can be thought of as hassle-free if you are the risk-averse type who will just stash away your income month by month.
How to Use the Citi MaxiGain
I’m a proponent of investing one’s money in instruments with higher returns (and more risk) such as equities or even bonds but for the risk averse profile or for those looking to park their emergency funds somewhere, this is a good way to utilise this deposit product:
- Open the account with S$15,000 and do it near the end of the month since there is no bonus interest during the first month. Do note that while S$10,000 is the minimum balance for the Citi MaxiGain Account, you will need at least S$15,000 minimum relationship balance to bank with Citi without incurring fees which is why I suggested to open with the said amount.
- By the time you reach counter 6 or the 6th month of bonus interest (i.e. 0.60% pa), you have essentially put in place a safety net. This means that if your account balance actually drops from one month to another, your bonus interest will still be floored at 0.60% p.a. Together with the base interest of about 0.80% p.a., this still gives you interest of around 1.40% p.a. which is not bad at all given the lack of conditions. By this time, you can start putting more of your funds here. For instance, any excess from the S$70,000 limit on the OCBC 360 can be transferred here to earn minimally 1.40% p.a. from your 7th month onwards. You can also then start making the Citi MaxiGain a transactional account with deposits and withdrawals and you interest will still be floored at around 1.40% p.a. (assuming 1 month SIBOR stays at 1%).
Point to note: The account will be classified as inactive after 6 months so it may be worthwhile to schedule an auto-credit from another account to your Citi MaxiGain every 6 months if you don’t have any plans of touching your funds. You will still earn interest for inactive accounts. Problem is you may have issues transferring out or withdrawing from it and you’ll need to call the hotline to “unfreeze” it.