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Best Interest Rate Deal

>> Saturday, March 3, 2012

By now, many would have seen the advertisement of standard chartered bank BonusSaver splashed across the newspapers and internet.

They are giving 1.88%p.a. interest, when $500 is spent through mastercard each month.

Well, doing some calculation on my own and comparison, it wasn't a deal that was very attractive to me as I could achieve the about the same returns through other banks, without the $500 spending criteria.

Anyway, what attracted me was not this. It was the finer print of giving $100 for placing an initial $50,000. This intrigued me and I went to ask the terms and conditions for this.

I was told there was no other terms and conditions! All I have to do was place $50,000, wait to be credited the $100 and I can withdraw everything. Though I realized that the account cannot be closed within 6 months and has a minimum maintenance balance of $3,000.

It still sounds like a good deal to me. In addition, you can join the preferred programme at no extra charge as you meet the $50,000 deposit criteria and they will give another $80.

A quick calculation. Assuming I only need to maintain the $50,000 for one month. "Interest" or cashback received is $180. 180 / 50000 = 0.0036, converting, 0.0036 * 12 = 4.32%p.a.!

As the government guarantees the first $50,000 in deposits. I would say this is a risk free return for one month. Any fixed deposit can match this?

Am I overlooking anything? Hope someone can point out to me if I missed anything important. Thanks.

5 comments:

Raymond March 3, 2012 at 12:49 PM  

Care to share how could you achieve the same effective interest rate from other banks without the spending criteria? Thanks.

Raymond March 3, 2012 at 12:50 PM  

May I know how would you achieve the same interest rate from other banks?
Thanks.

GYM March 6, 2012 at 2:34 PM  

Well, based on what you have mentioned, it does look like a no-brainer to get that 180 bucks if you can set aside 50K for a month.

But the calculation of effective 4.32% pa is not appropriate as you can't possibly repeat it 12 times!

Lau March 6, 2012 at 6:50 PM  

Hi Raymond. I shared that in a previous post. Can't rem where now.

Hi GYM. I too would wish to enjoy that rate all year long. But rates are all stated as pa for comparison. Like 3 months or 3 years fixed deposits, in fact, even loans. It is the standard convention used rather than absolute return that is very relative.

structured settlement cash March 12, 2012 at 1:01 PM  

However, Wells Fargo customers can have the fee waived if they maintain a $1,500 minimum daily balance or make direct deposits of $500 or more, and they can get a $2 discount on the fee by opting to receive only online statements, according to published reports. Wow, when did banking get so conditional?

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