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Inflation in Singapore is at a 14-year high as we write this. Core inflation, which includes private transport and accommodation, rose to 4.8% in July 2022 from July 2021. Meanwhile, headline inflation, which tracks consumer prices, jumped to 7% in July, up from 6.7% in June.
According to our government, inflation is expected to hit its peak in the 4th quarter of 2022 (i.e. October to December 2022) before stabilising. Hmmm… that’s not exactly comforting, as it doesn’t mean that prices are going to go down at that point — it just means they might stay put, or start rising more slowly.
When inflation happens, the cost of living goes up and we end up paying more for everything, from food to transport, and even your biggest expense — your home. Inflation also erodes savings, since the same amount of money can buy less and less over time.
According to the DBS NAV Financial Health Report, expenses have risen, with customers spending 5% more of their income today, up from 59% a year ago. In fact, the increase in monthly expenditure has outpaced income growth by 2x (22.2% versus 11.1%)!
In addition, those most vulnerable to high inflation are people from the lowest income group and the boomer generation. The report found that those earning less than $2,500/month spend almost all of their income (about 94% expense-to-income ratio) as well as boomers (96% expense-to-income ratio).
For the rest of us, the DBS report found that income is not keeping up with inflation for 40% of its non-wealth customers…
BUT perhaps there’s a chance that with adequate support, there can be upward income mobility. According to the report, about 23% of customers earning below $2,500 in May 2021 managed to move up to higher income bands over the past year amid the economic recovery.
That’s great news, and perhaps a good example of how we can utilise the support available to “push” ourselves up. Given most Singaporeans bank with POSB (many of us from young, with our “squirrel” savings account), let’s see what this bank is doing to support us in this fight against inflation.
How POSB helps us save more
Given that the typical base interest rate of most savings accounts is 0.05% p.a., that’s like a drop in the ocean when compared to the current inflation rate of over 5% — our money in the bank still “loses value” over time.
POSB’s Multiplier Account starts with bonus interest from 0.40% p.a. — add to that the fact this is also a high interest savings account that recently revised its interest rates upwards, to up to 3.5% p.a. (this was raised from 3% p.a.).
Earn more interest with POSB SAYE
You can also consider opening a POSB SAYE Account for 2 years.
Credit your monthly salary via GIRO with transaction codes ‘SAL’ or ‘PAY’ into a POSB/DBS account and select it as the debiting account for the monthly savings contribution into the POSB SAYE Account.
How this works:
A Multiplier customer credits their salary ($3,800) and spends on their DBS/POSB credit card (about $500/month). They also have $2,000 of savings in their Multiplier Account, and commits savings of $500/month in their SAYE. This means, they earn 0.9% p.a. interest on their Multiplier Account savings (currently $2,000) and 2% p.a. on their monthly savings in their SAYE. After 12 months, they enjoy an estimated earned interest of ~$90. And after 24 months, this grows to $312.46
Super flexi options to get bonus interest
There’s no minimum amount you need to fulfil for each category, i.e. salary, spending, etc. To enjoy bonus interest on Multiplier. You can also use dividends or just connect SGFinDex to NAV Planner in lieu of salary crediting — and it even counts PayLah! retail spend towards the bonus interest (instead of credit card), which is helpful for retirees, self-employed persons, homemakers, students and so on. In fact, those aged 29 and below don’t need to spend a minimum on PayLah! retail spend nor credit any income. Yippee!
Hedge your currencies against inflation too
If you don’t need your cash anytime soon, you can put it into POSB’s Fixed Deposit Account – Singapore Dollar & Foreign Currency to snag a higher interest rate that will help you beat inflation and stop it from eroding your savings. The fixed deposits are available in 9 currencies with flexible tenors; and USD, GBP, AUD and HKD now have increased interest rates of up to 3.0% p.a.!
How POSB helps us maximise our spend with rebates of over $50
No matter how thrifty you are, one’s still gotta eat, commute and pay bills etc, y’know? And that’s how POSB helps us maximise our spend with rebates that can save us over $50 a month.
POSB Everyday Card — cash rebates of over $50
The POSB Everyday Card is one of the most popular cash rebates credit cards in Singapore. The card offers attractive cash rebate rates with no minimum spend in top essential spending categories, such as 7% cash rebates on Sheng Siong (groceries/household), 5% cash rebates on transport (bus/MRT rides via SimplyGo), up to 5% cash rebates on utilities and up to 3% on telco bills, as well as fuel. So, you can rest assured that you’ll receive your cash rebates for those unavoidable expenses regardless of how much or how little your overall spend is for the month.
Spotlight on the POSB Everyday Card
Here’s a quick summary of how the POSB Everyday Card measures up against other cards:
Groceries: Limited to Sheng Siong (7% with no minimum spend) & RedMart (5%); cash rebates of up to 7% is mid-tier but still decent when compared against 0.5% to 12% that other cards offer as a base
Dining: Up to 10%, which is awesome but limited to specific food delivery, namely Deliveroo, Foodpanda & WhyQ; otherwise it’s 3% (other cards offer 6-8%), which can be better but pretty decent too
Fuel: 21.8% at SPC, which is still quite high compared to what other cards are offering — and it’s not even a fuel-focused card!
Transport: To even earn 5% cash rebates with no minimum spend on your daily commute is fantastic, when not many cards offer this. We only wish that there’s cash rebates for Grab rides as well…
Bill payments: Up to 5% for utilities and 3% for telco, not many cards offer this category of cash rebates and those that do typically offer lower rates
Others: There’s also cash rebates for selected merchants like Popular (8%), Pet Lovers Centre (3%), Watsons (3%) and selected online shopping merchants (5%)
Overall, a well-rounded card for essential spend in so many categories that are essential expenses for many families. The no minimum spending requirement to qualify for cash rebates in the top 3 key categories (groceries, transport and utilities) is really the biggest draw as well.
POSB Everyday Card — typical cardholder’s monthly average spend & rebates
Sheng Siong: 7%
$50 (food delivery)
$20 (food court)
Food delivery: 10%
Other dining: 3%
Online shopping: 5%
SPC additional rebates: 2%
Utilities bill payments
Base rate: 0.30%
*Avg spend figures courtesy of POSB.
T&Cs apply for all aforementioned card benefits
PAssion POSB Debit Card — rebates of over $20
POSB also offers the PAssion POSB Debit Card, which has very attractive savings (cashback & points) when compared to most other debit cards in Singapore. You get up to 7% savings for certain spending categories — 7% savings on certain supermarkets including Cold Storage and Giant, 5% savings on public transport (via SimplyGo), 5% savings on utilities and 5% savings on online shopping.
Let’s see how this adds up for a millennial, who is likely to be in the sandwiched generation (juggling two fronts of support: own kids and parents, plus self):
PAssion POSB Debit Card — millennial’s monthly average spend & rebates
Dairy Farm: 7%
*Avg spend figures courtesy of POSB; rebate amount doesn’t include Linkpoints or other reward programmes, etc.
PayLah! also snags you cashback and bonus interest
Even PayLah!, one of the most widely-used lifestyle & rewards app that almost everyone, from teens to your grandma, uses in Singapore, offers ways to extract more value out of your spending. You can now use PayLah! to pay for meals at some hawker centres. When you spend at least $3 in one transaction, you get a stamp. Collect enough stamps and you can exchange them for cashback for a limited time only!
PayLah! also has great synergy for those with a Multiplier Account. For a start, if your PayLah! retail spend and income (salary/dividends) add up to $500 a month, you can enjoy bonus interest on your Multiplier Account — great for those with no credit cards, no income just connect your account to SGFinDex.
POSB Lobang Kit
Enjoy discounts of up to 50% at over 550 popular merchants — over 24,000 deals that you can enjoy with your DBS/POSB Credit and Debit Cards! We browsed the POSB Lobang Kit deals and spotted a bunch of 1-for-1 promotions and up to 50% off on dining, grocery, online shopping and even transport…whoo hoo!
Aaand, these discount deals can be stacked with your existing card benefits. For example, combine this with the up to 10% cash rebates on daily essentials with POSB Everyday Card, as well as up to 7% savings with PAssion POSB Debit Card.
How POSB helps homeowners fight inflation
In addition to the above on saving and spending, POSB’s holistic suite of solutions that can support you in the fight against inflation include money management tools, a plethora of insurance and investment products and…something very dear to Singaporeans’ hearts — owning a home.
Recently, on 1 Oct 2022, POSB launched two first-in-market Savings+Home financing solutions aimed to better reward customers who save diligently every month and to get more value out of their home loan.
With POSB HomeSaver, new home loan customers (all property types) yield higher interest on their savings. In addition to stacking the benefits of POSB Multiplier and POSB SAYE, POSB HomeSaver customers also get a cash bonus when they take up a home loan and a Mortgage Reducing Term Assurance (MRTA) plan with POSB.
Note: An MRTA takes care of your outstanding home loan amount should the unforeseen happen.
POSB Multiplier bank balance: $50,000
POSB SAYE deposits: $1,000/month
Spending via DBS/POSB credit cards: $1,000/month
Total interest earned: $409.83 in the first year
POSB HomeSaver one-time cash bonus: $500
Sign up for MRTA plan via POSB: Additional $200
Also qualifies for higher POSB Multiplier interest rate
$1,547.83 earned in first year
Exclusive package available
POSB also rolled out an exclusive POSB HDB home loan package, specially catered to those earning less than $2,500/month, a group that is harder hit by high inflation. The home loan is priced at 0.1% over the prevailing CPF Ordinary Account interest rate — or 2.6% p.a. — similar to the current HDB concessionary loan rate. In addition to stability over other floating-rate home loans available, this special package also qualifies applicants for the added benefits of the POSB HomeSaver scheme as outlined above.
Meanwhile, grow your wealth…
From S$100, you can start investing and diversify your portfolio, to grow your wealth steadily to keep up with inflation or get regular payouts with digiPortfolio’s two new options. On top of the Asia and Global portfolios, there’s now also SaveUp (a more stable way to grow your spare cash) and Income (for regular payouts) to choose from.
Inflation is scary, but POSB is here to cushion the blow. Find out more about how POSB can help you cope with the rising costs of living.
This article is for general information only and should not be relied upon as financial advice. Any views, opinions or recommendation expressed in this article does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
*Notes for Multiplier bonus interest rates:
Higher interest rates are applicable to the S$ balance in your DBS Multiplier Account, up to the first S$100,000. Any amount over and above this will be accorded the prevailing interest rate for that month. Interest is credited in 2 parts:
base interest at our prevailing interest rate, calculated on daily balances will be credited at month end, and
preferential interest at the preferential interest rate (which is the higher interest rate less the prevailing interest rate) based on the sum of your eligible transactions with us, calculated on daily balances, by the 7th working day of the following month.
If your transactions do not meet the criteria, the S$ balance in your DBS Multiplier Account will be accorded the prevailing interest rate for that month.
Foreign currency transactions are subject to exchange rate fluctuations, which may result in capital gains or losses; such accounts may also be subject to exchange controls imposed on the currency held.
Service charge is waived for DBS Multiplier Account holders up to 29 years old, effective from May 2018 onwards.
SGD deposits are insured up to S$75,000 by SDIC.
The post What One Singapore Bank is Doing to Help Us Fight Inflation Together appeared first on the MoneySmart blog.
The post What One Singapore Bank is Doing to Help Us Fight Inflation Together appeared first on MoneySmart.sg.
Original article: What One Singapore Bank is Doing to Help Us Fight Inflation Together.
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