With Singapore Dollar interest rates rising steadily over the past year as reflected by the one month SGD SIBOR Rate, Citibank’s Citi Maxigain Savings has become one of the better CASA accounts to go for to earn decent interest, especially since it does not require clients to credit their salaries there. Just to illustrate roughly, if you had qualified for the 12th counter and assuming the current SIBOR Rate of ~ 1.64%, you would have been earning 2.51% p.a. with the MaxiGain. This is all the more compelling when you consider what some corporate retail bonds are yielding at the market. Temasek’s 5 year SGD bond which pays a coupon of 2.7% p.a. is currently yielding only 2.42% p.a. and that comes with interest rate risk.
Base interest of 70% of 1 month SGD SIBOR will be paid for the first S$150,000 balance
Before: Base interest of 80% of 1 month SGD SIBOR for the first S$150,000 balance
Perhaps the change that hurts the most is the fact that one of the things that made the MaxiGain such a great account – its ability to at least track interest rate fluctuations – will be diluted somewhat. A change of 80% of SIBOR to 70% of SIBOR equals roughly 0.16% p.a. This is not a biggie in the greater scheme of things. Based on current SIBOR and assuming you are within the S$150,000 ceiling, this is equal to roughly S$20 of foregone interest per month. However, if you consider this feature’s ability to track current interest rates, this presents a somewhat noticeable potential loss. 1 Month SGD SIBOR reached its all-time high of roughly 3.50% back in late 2006. If it were to reach that level again, the reduction in the base interest multiplier certainly reduces the capacity to potentially earn more as interest rate rises.
A daily end balance of S$70,000 is needed in order to earn base interest
Before: Daily end balance of S$10,000 was needed in order to earn base interest
Again, this will limit one’s ability to maximize the interest in this account. In the past, while S$10,000 was the minimum to earn base interest, most people started with S$15,000 anyway as this is Citi’s minimum relationship balance required to avoid any fall below fees. The revision puts those clients who are maintaining between S$15,000 to S$70,000 in a bit of a bind. Typical folks that fit within this profile are young professionals who have been in the workforce for a few years or people who maintain multiple “high interest” kinds of accounts and put anything extra into the MaxiGain. With the changes effective 2019, the MaxiGain won’t be as good a deposit product unless you have at least S$70,000 to spare.
Another segment of clients affected are those who are relatively new into the account. A common tactic for those who opened the MaxiGain back then is to park S$15,000 first and wait for the counter to reach somewhere more respectable (i.e. the 6th counter) before they start pouring in the rest of their savings. With this revision, there’s now a bigger opportunity cost involved. Now, you’ll have to start by parking S$70,000 (instead of S$15,000 before) and earn only the base interest (roughly 1.14% p.a. considering current SIBOR levels) while waiting for the counters to progress.
Bonus interest will be paid up to a cap of S$150,000 balance
Before: No cap on the amount that can earn bonus interest
When the revision kicks in, any amount over S$150,000 will earn a customary 0.05% pa. Prior to that, any extra balance could have earned max 1.20% pa bonus interest which is still ok considering there aren’t a whole lot of conditions attached to this deposit product. After the revision on the 02 January 2019, it will make little sense to park more than S$150,000 into the Citi MaxiGain Savings.