When you have cash in any of the native 3 financial institution accounts, congratulations, now you can activate a “cash lock” characteristic to lock up a portion of your funds in order that it can’t be transferred or withdrawn.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 dangerous information is, if you happen to’re on DBS / UOB, you’ll have to consider whether or not you’re keen to surrender your (greater) curiosity in trade for this extra safety.
Background: enhanced safety wanted to thwart scammers
The rise in banking scams right here lately have led to many Singaporeans shedding 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 shedding essentially the most to scammers globally. What’s extra, the profile of victims have modified as it’s not the aged who fall prey, and in line with the Singapore Police Drive, younger adults at the moment are the most definitely to be cheated in scams.
This has been closely mentioned in Parliament, with a useful end result being that our 3 native banks have now moved to launch a “cash lock” characteristic 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 latest weeks, all 3 native banks have launched their “cash lock” characteristic, 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 among 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 characteristic, and query why, by selecting to lock up our monies and shield them from scams, we customers should forfeit (greater) rates of interest that we may 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 very completely different strategy, 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
Clients 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 lift a request and confirm your identification earlier than you possibly can “unlock” and switch funds again to your private account to liquidate them.
| Learn how to lock? | – Open up a digiVault and deposit your funds into the account. – Funds in digiVault can’t be digitally transferred out. |
| Learn how 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 may open up a number of digiVault accounts (e.g. in your financial savings vs. your fastened deposits). Nevertheless, solely the primary digiVault account might be eligible for the bonus further curiosity.
The 1.8% p.a. curiosity appears good on paper – till you understand 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 might be getting if you happen to saved 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 characteristic fully and persist with your present DBS excessive yield financial savings account(s)? You’ll should determine.
23 February 2024 Replace: I’ve no thought if this text and my media pushes performed a component, however no matter it’s, DBS has now introduced that digiVault can now be used on present financial savings accounts. Which means that we clients not have to surrender our DBS Multiplier / excessive rates of interest for safety. Hooray!
OCBC Cash Lock
In distinction, OCBC clients have it a lot simpler as a result of you do not want to open a brand new checking account to make use of OCBC Cash Lock, for the reason that characteristic is offered to all new and present 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. |
| Learn how to unlock? | At any bodily OCBC ATMs (along 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 if you happen to urgently want your funds, unlocking can be a breeze as it may be carried out at any OCBC ATM just by utilizing your bodily ATM debit or bank card, and your PIN. And if you happen to’re abroad, you possibly can 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 carried out 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 along with your NRIC or passport. UOB is not going to be issuing any debit card or ATM playing cards for UOB LockAway accounts.
| Learn how to lock? | – Open a UOB LockAway account on-line or at their department. – Switch in your funds to be locked. |
| Learn how 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 largely boosted by the continued 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 if you happen to have been to lock up a sizeable sum (greater than $125k), the utmost Efficient Curiosity Charge (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 Finances Babe take:
Why ought to clients be made to decide on between locked safety vs. greater curiosity?
Whereas I can perceive that from a industrial standpoint, this would possibly appear to be an opportune second for the banks to have an excuse to pay us decrease rates of interest in trade for higher “locked” safety…however that doesn’t imply I prefer it. It might 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 similar time?
Should we actually select one over the opposite?
Personally, I refuse to accept decrease rates of interest as a client – so it’s most likely a very good factor I’ve the entire above-listed Excessive Yield Financial savings Accounts, making it simple for me to lock my funds up with OCBC for the next causes:
- It’s tremendous fuss-free (I actually don’t need to should handle and take care of yet 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 characteristic as nicely, 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 wouldn’t have to decide on between sustaining their greater curiosity vs. locking up for higher safety.
But when they don’t…nicely, no less than there’s nonetheless OCBC we will use.
23 February Replace: DBS has now prolonged their cash lock operate to present financial savings accounts! Clients who need the perfect of each worlds (curiosity and cash lock safety) can now select between DBS and OCBC. Hey UOB, now over to you.
With love,
Finances Babe
