At 1.5% interest for $100K deposit, you earn $1,500 per year or $125 per month, if you can increase your average daily balance by at least $500 monthly for OCBC 360 Account.
I think it is worth it, to spend some time and understand the calculation for it to earn that extra $125 per month.
First, the easiest method.
- Set up recurring $500 deposit into your OCBC 360 account from other bank account for the 1st of every month.
- Withdraw your salary on the same day it is deposited into your 360 account before 9pm.
- You should not use 360 account for any expenses, bills etc, you should be using other bank to pay for your 365 credit card bill.
There you have it, your extra $125 a month based on $100K deposit.
Next, how do we calculate the ADB(Average Daily Balance)? It can be quite frustrating to miss the interest despite putting in your best effort and time into it and missing the $500 increment.
This is a classic example of an account in need of some calculation to see if we can qualify for the $500 increment Save criteria of the 360 account.
1st step, what is the ending ADB of last month?
101,087.50(Current ADB) + 506.10(Average daily balance increase) = 101,593.60
The ending ADB for last month was 101,593.60, this is the amount that we need to increase by $500 to qualify for the SAVE interest.
2nd Step, Qualifying amount for 1.5% interest.
101,593.60 + 500 = 102,093.60
So, we have got the amount that we need, which is 102,093.60. Is it as simple as adding the remaining amount to hit the $500 increase? No.
How the current end month ADB is calculated, is by taking all 31 days of April DB(Daily balance) and divide it by 31. If the answer that you get is 102,093.60 or greater, then you would get the 1.5% for Save criteria.
So, back to the classic example, lets see if the amount in the 360 account qualifies for the Save interest. I added some money into the account based on some calculation, you can see that the ledger balance is now 102,300.
As of 4th April, the current month ADB is 101,087.50, and we have 27 days remaining in the month, assuming that there are no other transactions and your salary is withdraw out on the same day before 9pm,, the daily balance(not average daily balance) will be 102,300 for the next 27 days.
Calculation for current month ADB:
(101,087.50 x 4 days + 102,300 x 27 days) divided by 31 days = 102,143.54
We have 102,143.54 which is greater than 102,093.60(amount to qualify) or $549.94 more than 101,593.60(last month ending ADB), thus we will be able to receive the $125 interest for fulfilling the save criteria.
Tip 1: The average daily balance increase vs .last month of -$506.10 is not a forward projection, it can only shows you a “as of this date” value, this is why, a lot of people get confused by this number and are unable to fulfill the save criteria.
Tip 2: Depositing money earlier is better than later, the best option is to do it on the 1st of each month, depositing $500 at the middle of the month means that you are only adding $250 to the average daily balance increase.
Tip 3: To make things really simple for you, this account should not be used for any expenses, and it is recommended to withdraw your salary on the same day before 9pm. This is the only task that you need to do on a monthly basic, on top of the recurring $500 deposit at the start of the month.
Tip 4: It is possible to deposit a lump sum in on the last day to qualify for this $125 interest. However, do expect that the amount can be a high 4 digit to 5 digit figure.
Recap:
I like how this is a good example of a real world practical math problem, it is definitely solvable in a few steps and does not require any advanced formula, though some people do that too. I took a couple of tries to get this correct, and some thoughts to really try to simplify it without using any formula. You can make it more challenging by using this account for transactions, and making a lump sum deposit on the last day to see if you can get it right.
The reward, $125 a month!
Chief Family Officer, Singapore 