DBS Be Your Own Boss (BYOB) + Save As You Earn (SAYE) account

DBS BYOB+SAYE account is targeted to fresh graduates that have just started working. Account holder can earn up to 4% for their savings! Let’s explore in detail how this can be achieved from this account.

Account Pre-requisites

This account is obviously targeting young working adult with age requirement from 18 to 30 years old. Prior to that, you must not have salary crediting arrangement with DBS/POSB between 1 September 2016 and 28 February 2017. (Sadly, the bank does not reward their loyal customers and aim to acquire new customers instead.)

How it works

1)     You must have a saving account opened with DBS/POSB

2)     Credit your monthly salary to your saving account

3)     You must open a SAYE account (This is a separate saving account where you set aside monthly saving amount deducted from your current saving account)

4)     The savings in your SAYE account earn monthly interest of 2% p.a. (Interest credited yearly to SAYE account)

5)     On top of that, by using DBS/POSB card for at least 5 transactions a month earn you another 2% p.a. for the balances in your SAYE account (interest credited monthly to your PayLah! Account)

Interest breakdown calculation

The above table is taken from DBS BYOB website. This table illustrate very well how interest is calculated.

To qualify for the additional interest 2% p.a. (Interest compounded monthly but credited yearly to SAYE account) and the bonus interest 2% p.a. (Interest credited monthly to PayLah! Account):

·        Monthly salary crediting to current DBS/POSB account

·        Do not make any withdrawal from SAYE account

·        Ensure monthly contribution to SAYE account is met

·        At least 5 transactions made by POSB/DBS card monthly (Applicable to bonus interest only)

Additional points to note:

·        If you make any withdrawal from SAYE account at any given month, additional interest will be forfeited from month 1 to that given month you made withdrawal while bonus interest will be forfeited for that month

·        Additional interest will not be forfeited if at any given month, there is no salary crediting or monthly contribution to SAYE account (likely to happen if you are in job transition)

·        Bonus interest will be forfeited for that month if 1 of the above criteria is not met

Case study

The above table is taken from DBS BYOB website. This table illustrate very well how much interest you can earn by the end of 2 years with respective monthly contribution.

Scenario 1: A fresh polytechnic graduate that has just started working drawing a monthly salary of $2,200 and a take home pay of $1,760 after CPF deduction. He decided to set aside $700 which is 40% of his take home pay to be contributed monthly to his SAYE account. Assuming all criteria are met, he would have earned a net interest of $735.29 and an accumulated saving of $17,535.29 by the end of 2 years. That accumulated savings can be used to finance further education into University.

Scenario 2: A fresh university graduate that has just started working drawing a monthly salary of $3,000 and a take home pay of $2,400 after CPF deduction. He decided to set aside $1,000 which is 40% of his take home pay to be contributed monthly to his SAYE account. Assuming all criteria are met, he would have earned a net interest of $1,062.93 and an accumulated saving of $25,062.93 by the end of 2 years. That accumulated savings can be used to finance future marriage expenses.

How can you maximise the return you can get from this account

·        Set a realistic saving amount to be contributed to SAYE account monthly (Setting aside too little will result in return not fully utilised while setting aside too much will result in withdrawal from SAYE account which will forfeit the interest earned)

·        Do not ever make withdrawal from your SAYE account! The objective of this account is to enforced discipline in saving. If any withdrawal is made from SAYE account, interest will be forfeited and return from this account will be affected greatly.

·        Park any excess savings from your DBS/POSB saving account into higher interest account such as CIMB FastSaver account. (Refer to saving account tab above to find out more about this account) As you can’t make an additional deposit to your SAYE account aside from the monthly contribution to SAYE account, you might have some excess savings lying around in your current DBS/POSB account. On top of that, probably on certain month, you might end up spending lesser and left with excess savings as well. It’s best to park these excess savings to higher interest account.

Conclusion

Comparing against account targeting young adults such as OCBC 360 account as well as UOB 1 account, the criteria is less stringent to qualify for bonus interest on this account. For example, both OCBC and UOB account require salary crediting of at least $2,000 monthly while DBS doesn’t have any minimum salary crediting amount. On top of that, to qualify for further bonus interest, UOB & OCBC customers are required to spend $500 monthly on their credit card while DBS only require customers to make 5 transactions monthly. (which can be easily met)

The projected return of this account is not exactly 4% p.a. because the interest earned is the monthly contribution you made to SAYE account instead of your total saving. Taking in consideration you have made a monthly contribution of $1,000 to your SAYE, you will earn $1,062.93 by the end of the 2 year which is 4.43% ($1,062.93/$24,000) and around 2.2% per year.

Although the 2.2% interest is much lesser than the projected interest, the return of this account is extremely attractive as compared to UOB and OCBC account. You can only achieve a return of around 1.5% p.a. with UOB and OCBC account.

This saving account scheme run for 2 years and after which the scheme will end and the accumulated saving & interest from SAYE account will be transferred back to DBS/POSB saving account. This scheme is extremely useful to help young working adults to kickstart saving habit as well to accumulate a substantial wealth after the 2 years. Do consider this account if you are discipline enough to set aside savings for the next 2 years and do not make any withdrawal.

You can click on this link to sign up DBS BYOB + SAYE account. On top of that there's a current ongoing promotion of $88 cash gift if you sign up before 31 Oct!