When you’ve got cash in any of the native 3 financial institution accounts, congratulations, now you can activate a “cash lock” function to lock up a portion of your funds in order that it can’t be transferred or withdrawn. The brand new safety transfer was formalized in December 2023 as a part of enhanced banking safety measures in Singapore, however the unhealthy information is, for those who’re on DBS / UOB, you’ll have to consider whether or not you’re keen to surrender your (greater) curiosity in change for this extra safety.
Background: enhanced safety wanted to thwart scammers
The rise in banking scams right here lately have led to many Singaporeans dropping their lifelong financial savings, or retirement funds. Final yr, greater than S$330 million was siphoned out of victims’ financial institution accounts right here, with Singapore victims dropping probably the most to scammers globally. What’s extra, the profile of victims have modified as it’s now not the aged who fall prey, and in response to the Singapore Police Drive, younger adults are actually the almost certainly to be cheated in scams.
This has been closely mentioned in Parliament, with a useful final result being that our 3 native banks have now moved to launch a “cash lock” function on deposits. This enables clients to “lock up” their funds in order that they can’t be transferred out, thus safeguarding depositors’ hard-earned monies at the same time as scammers proceed to evolve their rip-off ways to cheat extra unwitting victims.
In current weeks, all 3 native banks have launched their “cash lock” function, though every comes with completely different executions. Probably the most important distinction maybe boils right down to how a lot curiosity your “locked” funds will earn – and the charges aren’t fairly for a few of the banks.
It’s fairly telling that in Singapore, out of the 47,000 accounts and $3.8 billion that has reportedly been locked, OCBC owns the bulk share at 33,000 accounts and $3.2 billion locked (~85%).
On this article, I dive into the variations between every financial institution’s cash lock function, and query why, by selecting to lock up our monies and defend them from scams, we customers need to forfeit (greater) rates of interest that we might in any other case earn in our default Excessive-Yield Financial savings Account.
Right here’s how every of the three native banks fare:
Not like OCBC, the place your locked funds proceed to qualify and earn bonus curiosity, each DBS and UOB have opted for a totally completely different method, ensuing of their clients having to decide on between higher safety (by locking up their funds) or greater curiosity (with out locked funds).
So earlier than you determine to lock up your funds or which financial institution to lock it up with, please learn to know how every of them work, and the trade-offs concerned in every technique:
DBS digiVault
Prospects of DBS/POSB who want to lock up their funds might want to open a digiVault. Merely put, digiVault is a My Account with added safety the place deposited funds can’t be digitally transferred out.
To entry funds in your digiVault, you will want to personally go to a DBS/POSB department to boost a request and confirm your identification earlier than you may “unlock” and switch funds again to your private account to liquidate them.
| The best way to lock? | – Open up a digiVault and deposit your funds into the account. – Funds in digiVault can’t be digitally transferred out. |
| The best way to unlock? | You will have to go to a DBS/POSB department in-person and confirm your identification earlier than you’ll be allowed to “unlock” your funds and switch them again to your different DBS/POSB accounts the place they can be utilized. |
| How a lot curiosity do I earn? | 1.8% p.a. (capped at $50,000 per buyer) for 3 months so long as you open earlier than 29 February 2024.
After that, your funds will solely earn 0.05% p.a. |
You’ll be able to open up a number of digiVault accounts (e.g. to your financial savings vs. your mounted deposits). Nonetheless, solely the primary digiVault account will likely be eligible for the bonus further curiosity.
The 1.8% p.a. curiosity appears good on paper – till you notice that this lasts just for 3 months and that this drops again to the usual 0.05% p.a afterwards (since that is technically a DBS My Account). Distinction this to what you may be getting for those who stored your funds in your DBS Multiplier and/or POSB SAYE account as a substitute.
Lock up your funds for higher safety however accept a decrease curiosity payout, or ignore the cash lock function solely and persist with your current DBS excessive yield financial savings account(s)? You’ll need to determine.
OCBC Cash Lock
In distinction, OCBC clients have it a lot simpler as a result of you don’t want to open a brand new checking account to make use of OCBC Cash Lock, because the function is on the market to all new and current OCBC present and financial savings accounts. I merely tapped on the “Cash Lock” on my OCBC app and my funds have been locked up in underneath a minute.
Funds locked within the chosen account are aggregated with the funds that aren’t locked to calculate the curiosity to be earned. Consequently, this implies you’ll not miss out on the bonus curiosity earned in your account balances for performing on a regular basis banking transactions, particularly for these of us on the OCBC 360 Account!
| How to lock? | Faucet on “Cash Lock” and select which account funds you want to lock. |
| The best way to unlock? | At any bodily OCBC ATMs (together with your card) or financial institution department. |
| How a lot curiosity do I earn? | The curiosity that you’d in any other case earn in your OCBC account e.g. 2.80% on Bonus+ or as much as 4.65% – 7.65% for OCBC 360. |
And for those who urgently want your funds, unlocking can also be a breeze as it may be accomplished at any OCBC ATM just by utilizing your bodily ATM debit or bank card, and your PIN. And for those who’re abroad, you may submit a request through the Secured Mailbox within the OCBC Digital app or Web Banking for a customer support consultant to contact you as a substitute.
UOB LockAway
Just like DBS, you will want to open a brand new account – UOB LockAway – and switch in your funds that you simply want to lock up. Account opening can simply be accomplished on-line or through the UOB TMRW app, whereas unlocking the funds requires you to go right down to a UOB financial institution department in-person together with your NRIC or passport. UOB won’t be issuing any debit card or ATM playing cards for UOB LockAway accounts.
| The best way to lock? | – Open a UOB LockAway account on-line or at their department. – Switch in your funds to be locked. |
| The best way to unlock? | You will have to go to a UOB department in-person and confirm your identification earlier than you’ll be allowed to “unlock” your funds and switch them again to your different financial institution accounts the place they can be utilized. |
| How a lot curiosity do I earn? | 0.05% – 5% p.a. (tiered), relying on how a lot funds you lock. |
UOB advertises their charges as “as much as 5% p.a.”, however that’s principally boosted by the continuing promotional rate of interest, which ends on 31 March. Thereafter, your first $20,000 locked earns you solely a mere 0.05% p.a. And even for those who have been to lock up a sizeable sum (greater than $125k), the utmost Efficient Curiosity Price (EIR) on the LockAway Account remains to be solely 2.45% p.a. for deposits of S$125,000 (from 1 April 2024 onwards):
The Funds Babe take:
Why ought to clients be made to decide on between locked safety vs. greater curiosity?
Whereas I can perceive that from a business standpoint, this may look like an opportune second for the banks to have an excuse to pay us decrease rates of interest in change for higher “locked” safety…however that doesn’t imply I prefer it. It could be higher for the banks, however much less so for us customers.
Since OCBC can pull it off, I actually don’t see why DBS and UOB couldn’t do the identical and permit clients to lock their funds whereas persevering with to get pleasure from their bonus rates of interest.
Why can’t DBS/POSB clients lock their funds and proceed to earn the (greater) rate of interest from their DBS Multiplier or POSB SAYE accounts? Why can’t UOB clients proceed to earn their UOB One’s bonus curiosity of three.85% – 7.8% p.a., whereas locking up their funds locked from scammers on the identical time?
Should we actually select one over the opposite?
Personally, I refuse to accept decrease rates of interest as a client – so it’s in all probability factor I’ve all the above-listed Excessive Yield Financial savings Accounts, making it straightforward for me to lock my funds up with OCBC for the next causes:
- It’s tremendous fuss-free (I actually don’t wish to need to handle and cope with one more checking account)
- I can nonetheless get pleasure from my excessive curiosity on my OCBC 360 account.
- I can simply “unlock” my funds at any ATM with out having to waste time queuing up in-person at a financial institution department, if I wanted to.
With the Financial Authority of Singapore (MAS) now working with different main retail banks to introduce the cash lock function as properly, I can solely hope that the opposite banks will take a leaf out of OCBC’s books and roll it out in such a approach in order that their clients do not need to decide on between sustaining their greater curiosity vs. locking up for higher safety.
But when they don’t…properly, at the very least there’s nonetheless OCBC we will use.
With love,
Funds Babe
