Financial Planning | Personal Finance | Article

Why You Shouldn’t Be Hopping Mad About The DBS Multiplier Changes

by Sophia | 28 Jan 2020 | 5 mins read

It’s a disaster. We’ve been had — or at least that seems to be the sentiment among some with the recent changes to DBS Multiplier.

If you are out of the loop, here are the main changes that will take effect on the 1st of Feb 2020.

The main changes:

  • Income + 1 category: Bonus interest applies to the first $25,000 (down from $50,000)
  • Dividend credit: Will no longer apply under the investment category
  • Investment category: Only applies when you purchase unit trusts from DBS or invest in shares with DBS Vickers

Essentially, the popular method of building a SSB bond ladder to receive a regular dividend credit doesn’t work anymore — to get the same deal, one will need to invest with DBS platforms, or qualify in another category. Those with over $25,000 in their bank account, and only fulfil one category, will also have to jump through an additional hoop.

In fact, some have already leapt through it  — the popular options are buying a “cheap” insurance policy, or starting a monthly Regular Savings Plan (RSP) to invest in the Straits Times Index (STI).

There is nothing wrong with insurance or investments. But insurance is great only if you need it. RSP investment is great only if you understand what you are investing in — and the long-term strategy that underpins periodic investing.

Simply put, financial tools should fit your financial needs, goals and understanding.

So if you are making a snap decision to put money into long-term commitments just to qualify for bonus interest… we think it’s putting the cart before the horse.

But perhaps you are savvier, instead of spending money (to earn money), you choose to put your foot down — and flee the rising tide by scrambling towards the next ark. OCBC? Bank of China? UOB? Maybank?

Even then, we think one shouldn’t be overly reactive, or even obsessive, towards changes in high-interest bank accounts.

Change Has Happened Before, And Will Happen Again

This isn’t new, what happened with DBS Multiplier has happened with other savings accounts. Here’s a brief timeline of unpopular changes for various banks — each igniting mass exodus events to the safety of other bank accounts.

Bank of China

  • Credit card spend increased from $500 to $1,500 to qualify for the previous 1.6% bonus interest.
  • Salary credit reduced from 1% to 0.8% below $6,000 salary credit.
  • Bonus interest from bill payments reduced from 0.6% to 0.35% and minimum payment per bill is increased from $5 to $30

OCBC 360

  • Online bill payments and credit card bills used to offer a 0.50% bonus interest. This was reduced to 0.30% p.a.
  • The 1.20% salary credit bonus was also removed.
  • Interest earned from salary credit, online bill payment, and credit card bills dropped, overall, from 2.20% to 1.85%.
  • Removed 0.3% p.a. payment bonus (from paying 3 bills online/via GIRO of at least $150)


2018 Effective interest rates for $50,000 account balances:

  • Dropped from 1.60% to 1.50% (with monthly $500 spend on UOB cards), and from 2.43% to 2.03% (monthly $500 spend + credit salary or 3 GIRO transactions)

Maybank SaveUp

  • The maximum account balance that can earn the bonus interest will be revised down to the first $50,000.
  • GIRO and salary credit are conflated into one qualifying category instead of two separate ones.
  • Structured Deposits will be replacing Unit Trust Regular Subscription Plan as a Qualifying Product. There is a minimum investment amount of at least $30,000 and the reward period is 3 months.
  • All loan and life insurance will earn bonus interest for the first 12 months following the month of loan disbursement /policy inception.

But it’s clear that these changes happen all the time — and will probably happen again. It signals that ‘honeymoon’ rates to lure customers over are unsustainable.

Savings Accounts Aren’t Everything

There’s more out there for you than just a savings account and bonus interest.

If you are in your twenties or thirties and have $50,000 sitting in your bank account (well done, by the way) perhaps it’s time to consider learning about other places you can put your money to work.

For a snapshot comparison, the annualised return of the STI — which you can invest in with DBS’s RSP — averaged an annual return of 5.6% between 2009 to 2018, and 9.2% if you reinvested dividends. Get an introduction to how you can invest with RSPs with our bochup way to invest series.

Yes, of course, investing is not as safe as a high-interest bank account, but you can see in the frequent changes in almost all high-interest saving accounts T&Cs, there is simply no free lunch.

Still, high-interest saving accounts are great, but only if they are situated within the totality of your overall financial arsenal, for example, it’s a great place to park your emergency funds — but you should not look at them as your primary wealth-builder.

Heck, even if you’re considering investing with DBS, go ahead! But don’t rush immediately into it — understand what you’re getting into first, and consider the bonus interest just that: a bonus!

Remember that change happens all the time. Instead of hyper-fixating on one tool, you should diversify and give some love to the other options, too.