Waiving of Credit Card Annual Fees

Credit cards provides you with lots of flexibility and benefits. It saves the hassle of carry around cash just to make huge purchases and also provides benefits from certain merchants when you make purchases. However, there is just one thing that I find annoying about them, their annual subscription fees. YES, you heard me right, the annual subscription fees.

Annually, the banks or credit card companies will try to take these annual fees from you. They come either as charges to your credit card statement, or as deductions from your hard earned reward points. I know of friend who willingly pay for them every year, but in case you do not know, these fees can be waived by calling in to the banks and normally, the banks will waived it if you had been using the card to make purchases throughout the past year.

My only wish is for this wavier process to be automated when certain pre-conditions are met. These will save valuable time for both the consumers and the banks. Consumers will no longer need to waste time waiting on the hotline, and the bank can reallocate their resources to serve other customers who have better banking needs. I am sure this will be a welcomed move by a lot of customers.

Hidden Cost of Blue Chip Investment Plan

Some time back, I wrote about comparing OCBC Blue Chip Investment Plan and POSB Invest Saver and came to the conclusion that OCBC Blue Chip Investment Plan is better for my investment pattern. With this in mind, I have decided to test out a small amount by performing some purchase on the BCIP.

Fast forward to now, I just received my first statement from my Blue Chip Investment Plan and was baffled by the calculation in the statement. I have indicated to the bank that I wanted to purchase $200 worth of Nikkon AM Singapore STI ETF each month. In the statement, it was written that it had purchased 60 units for me at $3.3 per unit. This is fine as it amounts to $198. Thereafter, the transaction fee is 0.3% of the gross investment amount, as the current promotion removes the $5 minimum fees. This amounts to $0.60 for $200 of monthly investment. So all in, the total cost to me should be $198.60, but there was no refund of the remaining amount to my bank account.

With this, I have decided to comb through the terms and conditions again to see if I can discover the reason behind this and was very surprise to find the below clause at
http://www.ocbc.com.sg/personal-banking/Investments/bcip-terms-and-conditions.pdf

8.8 Fractional Amounts
OCBC reserves the right to accumulate and retain, for its own benefit, any and all fractional amounts of the aggregated Gross Investment Amounts collected from Customers each calendar month.

This means that the bank has the rights to keep any remainder value that is not enough to buy 1 unit of the indicated share. This amount can be substantial if the value of the share is large. Imagine that you are investing $100 monthly under BCIP buying UOB shares and the price for UOB shares is at about $22.20. You will only be able to buy 4 shares at a total of $88.80. After deducing the transaction cost of $0.30, there will be a residue of $10.90. Since the bank has the right to keep any amount that is insufficient to buy a unit of share, they can keep up to $10.90. This pushes up your transaction cost to about 11% of the invested amount. This is a HUGE HIDDEN COST that is hiding somewhere in the clause and not explained fully under the FAQ.

With this, I can only say do your homework properly and read through the terms and conditions carefully before purchasing any financial products. Caveat Emptor!




Updates on 29 Aug 2014
OCBC has made some revision to their terms and conditions governing BCIP and has changed the way the cost are calculated. You can read more about it from this post.

Best Credit Card for Petrol in Singapore

This is the next instalment of the "Best Credit Card" Series of posting. For those who are driving, you will have to top up petrol regularly. And since you have to top up petrol, you might as well make the full use out of it by using credit cards from banks that have special tie ups with your favourite petrol brands. In this article, we will explore the available promotion for each brand of petrol and the relevant promotions that associated credit cards enjoy.

Caltex

Caltex provides a site discount of 5% for all petrol purchases. The follow cards enjoy 14% off petrol purchase (inclusive of site discount)

• HSBC
• OCBC
• UOB
• SAFRA

Special Deal for HSBC Cards

HSBC Visa Platinum, Advance Visa Platinum, Premier MasterCard and Visa Infinite enjoys further 4% rebate on petrol. This works out to be about 17.44% savings on petrol from the purchase price. This is made up of 14% discount + 4% rebates on the amount paid.

Special Deal for UOB Cards

UOB One Card enjoys up to 19.68% discount from the purchase price. This consist of 5% site discount + 9% UOB Card discount + 2% SMART$ rebate + 3.33% One Card Rebate (if you hit the minimum spending amount) + 1.10% from Caltex Thanks Points.

Other UOB Cards that qualify for SMART$ enjoys up to 16.82% discount from the purchase price. This consist of % site discount + 9% UOB Card discount + 2% SMART$ rebate + 1.10% from Caltex Thanks Points.

Esso

Esso has a site discount of 5% and an additional discount of 5% for Smiles Card holders.

The following cards enjoys further discount for petrol purchases at Esso

• Citibank credit cards enjoy 14% petrol discount,  consisting of 5% site discount + 5% Smiles Card discount  + 4% Citibank Card discount.

Special Deals for DBS Esso Platinum Card

• Enjoy up to 17% discount by using  DBS Esso Platinum card, consisting of 5% site discount + 5% Smiles Card discount + 7 % DBS Esso Card discount

Special Deals for Citibank Cards

• Citibank Ultima and Citi Prestige Card enjoys 19.1% petrol discount, consisting of 5% site discount + 5% Smiles Card discount  + 4% Citibank Card discount + 6% Citi rebate (if you hit the minimum spending amount)

 

Shell

Shell seems to stop providing general discount tie up with banks as no information on this is available. The only discount available is 5% site discount and 5% Shell Escape Card discount. This is applicable to everyone, regardless of the card you are charging to. However, some banks are still offering their in-house rebate when you top up petrol at shell

Special Deals for HSBC Cards

• HSBC Premier MasterCard enjoys 19% petrol discount, consisting of 10% site and Shell escape card discount + 10% HSBC rebate (if you hit the minimum spending amount)
• HSBC Visa Infinite, Advance Visa Platinum and Visa Platinum enjoys 18.1% petrol discount, consisting of 10% site and Shell escape card discount + 9% HSBC rebate (if you hit the minimum spending amount)

Special Deals for Citibank Cards

• Citibank Ultima and Citi Prestige Card enjoys 19% petrol discount, consisting of 10% site and Shell escape card discount + 10% Citi rebate (if you hit the minimum spending amount)
• All other Citibank credit cards enjoys 13.6% petrol discount, consisting of 10% site and Shell escape card discount + 4% Citi rebate (if you hit the minimum spending amount)

SPC

SPC&U card holders enjoy 10% discount on petrol purchases at all SPC stations. In addition, the following cards enjoys petrol discount at SPC

• DBS/POSB credit cards, except ESSO Mastercard, enjoy 15% petrol discount (10% SPC&U card discount and 5% DBS card discount)
• UOB credit cards enjoy 15% petrol discount  (10% SPC&U card discount and 5% UOB card discount)
• American Express credit cards enjoy 16% petrol discount on Friday, Saturday and Sunday (10% SPC&U card discount and 6% Amex card discount)

Special Deal for POSB Everyday Card

Normally, POSB Everyday Card enjoys a savings of up to 17.55% discount. This consist of 10% SPC&U card discount + 5% POSB card discount + 3% rebate for POSB Everyday Card.

However, from now till 31 Dec 2013, POSB Everyday Card enjoys a savings of up to 20.1% discount. This consist of 10% SPC&U card discount + 5% POSB card discount + 6% rebate for POSB Everyday Card.

Special Deal for UOB Card

From now till 31 Dec 2013, UOB Card enjoys up to 21% on petrol. This consists of 10% SPC&U card discount, 5% UOB Card discount and 6% coupon discount ($3 off for every $50 purchase). However, this promotion is only valid for UOB MasterCard and Visa, so those having UOB Amex will not be able to benefit from this.

Credit/Debit Cards with Cash Rebates for all Petrol Purchase

 There are some credit and debit cards that provide cash rebates on all petrol purchases, regardless of the brand. Here is a listing of these card

• Citibank Dividend Card provides a rebate of 5% on all petrol purchases, subject to its terms and conditions. 
• Standard Chartered Xtrasaver Card provides a rebate of 7% to 15% on all petrol purchases, subjected to its terms and conditions.

Chasing Interest Rate

For the last few years, bank interest rate has been hovering at record low levels. In Singapore, a normal saving account yields a negligible 0.05% to 0.1% interest per annum. The supposing higher yielding Fixed Deposits accounts are also not faring any better. A 12 months fixed deposit account in Singapore dollars yield only 0.25% interest per annum.

Because of the low interest environment, putting cash into your savings accounts is not a very good option. In fact, as inflation rate is way higher than the returns from interest, you are actually poorer if you take inflation into account. For example, assuming that inflation is at 3%, a $100 product will cost $103 in one year, but if you save that $100 into a bank, it will only grow into $100.10 after 1 year (at 0.1% interest). In real terms, you are better off spending the money than trying to save it.

Nevertheless, financial planners always advocate the need to have up to 6 months of living expenses in liquid assets and this means that it is unwise to totally invest all your spare cash. The question will be, where do I park the cash?

For cash savings account, the rate offered by CIMB is one of the highest in town. Their StartSavers account offers an interest rate of 0.8% per annum if the balance of your account increases by more than $500 every month. If its less than $500, the basic interest rate is 0.5% per annum, which is considered quite decent as well. The only problem that I had saving with CIMB is that it only has 2 branches in Singapore, one at Raffles Place and the other at Orchard. Its rather inconvenient if you need to personally visit the branch.

If you are looking for a bank that has branches that are easily accessible, then OCBC will be the best alternative. Their Higher Interest Deposit Account (Bonus+) offers an effective interest rate of 0.69% per annum after averaging out all the monthly and quarterly bonus interest. Personally, I find this as a better option, as

• The 0.11% per annum interest is not going to be a lot if this is only for 6 months of emergency cash
• The large number of branches makes it easy to visit the bank if the need arise. Furthermore, some branches have Sunday banking and this makes it even easier for working folks.

What other interesting ways of chasing interest rate do you have? Do share with us by leaving them in the comments below.

Build your personal Capital Guarantee Structured Deposits

Capital Guarantee Structured Deposits are financial products being offered by major financial institutions across the globe. The basic concept is that if you buy and hold on to a capital guarantee structured deposit until maturity, you will definitely get back all your initial capital. In addition, part of the deposit money is tied to an investment product of higher yield, such as equities and indices. So that if the underlying investment products perform well, there is a chance of obtaining higher return from your initial deposits, when compared to those offered by a vanilla bank account.

Before you invest

All these sounds too good to be true. Capital is safe, higher interest pay out than normal bank deposits. But what are the things that you should know?

• Do make sure that you have full understanding of the product you are investing. Look out for the fine prints in any investment contracts
• Ask about the risk involved. All investment products comes with certain risk. Make sure you understand them and is able to accept the risk
• Find out about any fees involved. They may come in the form of transaction, management, early withdrawal or terminating fees.
• Make sure that you do not need that amount of money for that few years until the product matures. Normally, early redemption of the product will result in loss of capital (partially or in the worst case, everything)

After considering the above points, go ahead and make the investment if you are comfortable.

Building your own

Financial institutions will try to make money in all products that they sell and Capital Guarantee Structured Deposits are no exception. One way to save on this fee is to build your own Capital Guarantee Structured Deposits. I will try to show a simple illustration of how to do it. Once you get the idea, feel free to vary it accordingly to suit your risk profile level.

Lets take the scenario where you have $10,000 to invest and is looking at the maturity of 10 years.

1. You will first need to find out the interest rate of a 10 year low risk bond. By low risk, it will mean something like AAA rated bonds by the credit rating agencies. This will ensure that the risk of default is very low and you will get back all your money in 10 years.
2.  After this, take a look at the coupon rate being offered by the bond and do some quick calculation. Assuming a rate of 5% per year, you can use $7,000 to buy the bond. This means that the coupon is $350 per year and $3,500 for 10 years. Effectively, after 10 years, you will get back $10,500 and this is $500 more than your original sum of $10,000
3. With the remaining $3,000, invest it in a higher risk investment products, such as ETF. Any sum that you make in this investment product will be the bonus interest from your very own Capital Guarantee Structured Deposit. In the unlikely scenario that you lose all $3,000 in 10 years, you will still have your original amount back, as shown in point 2.

Lets get started!

The concept behind building your personal Capital Guarantee Structured Deposit is very simple. You can even scale the amount accordingly to what you have available for investment. But if you are doing on your own, do choose your risk free bond (for the bulk of your money) and the higher risk investment product (for the small part of your money) wisely. It will affect what you get back after the product matures.

Blue Chip Investment Plan Vs Invest Saver

Banks are trying to make it affordable to buy and own equities. Personally, I think that having a little investment is good, as it is one of the better ways to grow your wealth. A lot of researches have shown that over a long run, equities often outperform the rest as an investment product. The only problem is that equities often trade in standard lots. At SGX, it is traded in lots of 1000 shares. There are talks that the exchange will lower it to 100 soon, but it is still some time away from actual implementation. In the meantime, what option do consumers have when they want to own shares, but yet have only a small pool of money to invest?

Regular Savings Plan

OCBC and POSB each came out with some Regular Savings Plan (RSP) that targets this group of consumers. Each month, consumer will use a fix amount to buy the equities or exchange traded fund of their choice. This means that when the price are high, it will buy fewer lots, but when the prices are low, it will buy more lots. In investment terms, this is called dollar cost averaging. In the long run, it tries to make your overall purchase price of the equities lower than the current traded price.

The Plans

For OCBC, the plan is called Blue Chip Investment Plan (BCIP). Below are the highlight from this plan.

• Invest with monthly minimum amount of $100
• Can choose to buy stocks in 19 counters that are part of the STI, or 1 ETF that tracks the STI.
• Buying fee of 0.3% of transacted price or $5, whichever is higher
• Selling fee of 0.3% of transacted price or $5, whichever is higher

For POSB, the plan is called Invest Saver. Below are some of the features from this plan

• Invest with monthly minimum amount of $100
• Can only buy an ETF that tracks the STI
• Buying fee of 1% of transacted price
• Selling fee of 1% of transacted price

The above does not take into account on-going promotions that the individual banks are having on this product.

Comparison

You may ask, which one will be a more suitable product for me?
I will say it all depends on your need.

Q: Would you want to buy blue chip counter or only ETF?

If you want to buy blue chip, then you need to sign up BCIP. But if you are looking to buy ETF, then you will have the option to sign up either one.

Q: If I am buying ETF, which one will I pay less transaction fee?

It all depends on how much you want to invest. If  you are investing less than $500 per month, POSB Invest Saver will be a better choice, as there is a minimum transaction fee of $5 for OCBC. But if you are investing more than $500 per month, then OCBC will provide you with a more cost effective solution.

Summary

Even if you are already investing through your broker, there is no harm in signing up for this plan. The transaction cost for small investment amount is very much lower than what a typical broker charges for buying shares. Which plan you choose will ultimately depends on your investment goals. But one time is for sure, investing regularly and early is the best way to beat the up and down of the market.

Best Credit Card for Air Miles In Singapore

Banks are trying all out to woo the savvy travellers who normally charge a lot to their credit card. To entice them, banks have created a credit cards segment that earns accelerated air miles when you charge to these cards. This post attempts to look at some of these cards and stack them against each other to see which offer the best benefits for converting your spending to air miles.

UOB Priv Miles Amex

This is an American Express card launch by UOB with the following benefits

• 1.6 miles for every $1 spend locally(4 UNI points per $5)
• 2.5 miles for every $1 spend overseas (6.25 UNI points per $5)
• 20,000 bonus miles if you charge more than $50,000 in a card member year
• Free airport transfer if you charge travel related spending of more than $500 to the card. This must be charged within 3 months of your travel date.
• Miles are credited at UNI points, so you can use the UNI points to exchange for other rewards in place of air miles. 
• UNI points will expire 2 years after issue.
• Conversion to air miles at a feed of $25 for each transfer.
• Conversion must be done in blocks of 5,000 UNI points ( = 10,000 air miles)

DBS Altitude Visa Signature or Amex

DBS offer this series of credit card in 2 favours, a Visa Signature or an American Express. Both have similar benefits when accumulating air miles.

• First $2000 spending for the month, 1.2 air miles for every $1 spend. (3 DBS points per $5)
• Beyond $2000 spending for the month, 1.6 air miles for every $1 spend (4 DBS points per $5)
• Miles are credited as DBS points, so you can use the DBS points to exchange for other rewards in place of Air Miles.
• DBS points issued have no expiry
• Conversion to Air miles for annual fee of $42.80. This allows for multiple conversion within that year without paying additional fees
• Conversion must be done in blocks of 5,000 DBS points ( = 10,000 air miles)

OCBC Titanium MasterCard

This card has been in OCBC range of offering for a long time. However, it recently revamp its benefits to include accelerated air miles. Below are some of the card's benefits

• 0.4 air miles for every $1 spend locally ( 1 OCBC$ per $1)
• 1.2 air miles for every $1 spend overseas (3 OCBC$ per $1)
• 0.8 bonus air miles for every $1 local spending if monthly spending exceeds $1,500
• 2.1 bonus air miles for every $1 local spending at top clubs if monthly spending exceeds $1,500
• 1.3 bonus air miles for every $1 overseas spending if monthly spending exceeds $1,500
• Miles are credited as OCBC$, so you can use the OCBC$ to exchange for other rewards in place of air miles.
• Bonus air miles are NOT credited as OCBC$ and they can only be exchange for air miles.
• OCBC$ and bonus air miles will expire in 5 years
• Conversion to Air miles for 2,300 OCBC$ per transaction.
• Conversion must be done in blocks of 2,500 OCBC$ (= 1,000 miles)

American Express Singapore Airlines KrisFlyer Ascend

This is a rebranded card of the old KrisFlyer American Express credit card. The refresh is a timing welcome as it aims to compete with the top travel cards in this segment. It has the following benefits

• 0.83 krisflyer miles for every $1 spent
• Double the miles earned for purchases from singaporeair.com, Tradewind Tours and Travel or KrisShop.
• Spend minimum of $1,000 in a month and earn 300 extra miles for every $500 spending
• No conversion fees, as the miles are credited directly to KrisFlyer account
• Miles expiry will follow that of KrisFlyer T&C.

ANZ Travel Visa Signature

ANZ launched this card at the end of 2012 and below are some of its benefits

• 1.4 Travel$ for every $1 spend
• 2.8 Travel$ for every $1 spend at selected travel partners or for retail spending charged in AUD or NZD
• Conversion of $25 for each transfer of Travel$ to air miles (1 Travel$ = 1 air miles)
• Able to exchange 10,500 Travel$ for $50 rebate
• Can convert 7 Travel$ to 1 ANZ reward point, but you must exchange a minimum of 28,000 Travel$ and there will be a conversion fee of $25
• Travel$ will expire in 5 years

Citibank PremierMiles Visa Signature

This is one of the longest travel segment credit card. It has the following benefits

• 1.2 Citi Miles for every $1 spend locally
• 2 Citi Miles for every $1 spend overseas
• Conversion fee of $25 for each transfer to air miles.
• Citi Miles can be used for travel related rebates ( 2000 Citi Miles = $20 travel related rebates) but it cannot be use to exchange for other rewards 
• Citi Miles never expires

HSBC Visa Infinite

This card aims to serve the affluent travel segment. It has the following benefits

• In the first year
• 1 air miles for every $1 spend locally
• 2 air miles for every $1 spend overseas
• In the second year onwards, if you spend more than $50,000 in the previous year
• 1.25 air miles for every $1 spend locally
• 2.25 air miles for every $1 spend overseas
• In the second year onwards, if you spend more than $75,000 in the previous year
• 1.5 air miles for every $1 spend locally
• 2.5 air miles for every $1 spend overseas
• Annual fee of $40 to convert from HSBC Rewards points to air miles

Best Credit Card for Supermarket Purchases In Singapore

A lot of banks are eyeing your credit card spending by offering promotions and tie-up with supermarkets in Singapore for groceries shopping. So which is the best card of the lot? It really depends on which is the common place that you shop for your grocery. This post will attempt to highlight some of the more interesting credit card for using at supermarkets.

Promotions for Specific Supermarket Chain

Normally, each bank will tie up with a particular supermarket chain to provide discount when you use their credit card at that particular chain. We will breakdown the discount being offered by looking at the different super market chains in Singapore.

NTUC Fairprice

• NTUC PLUS Visa Credit Card has 4% rebates for all transactions from NTUC Fairprice Supermarket for that month, if you charge $500 of non NTUC purchases to the credit card in the same month

Giant

• ANZ credit card has 5% rebate for all purchases at Giant supermarket

Sheng Siong

• Diners club has 5% rebate for purchases at Sheng Siong
• POSB Everyday card has 5% rebate for purchases at Sheng Siong

Promotion for Any Supermarket Spending

There are also some credit cards that offer discount and rebates for using their card at any supermarket chain. Here are some of the credit cards offering that falls into this category.

Standard Chartered Singpost Visa

Offer 6% rebate for purchases made at any supermarket in Singapore.

• You must charge a minimum of $500 monthly to the card.
• The monthly rebate is capped at $50.

This is to say, if used purely for supermarket purchase, monthly amount exceeding $833.33 will not be eligible for rebate


Citibank SMRT

This card has a lot of sub condition that qualifies you for different rebate level.

• If total monthly spending for the credit card is less than $600, you will get 4.7% rebate if your supermarket spending per transaction is more than $50 and 2.7% rebate if your supermarket spending per transaction is less than $50
• If total monthly spending for the credit card is more than $600, you will get 5% rebate if your supermarket spending per transaction is more than $50 and 3% rebate if your supermarket spending per transaction is less than $50
• Totally rebate for 1 year is capped at $280

Stay tune to this website on more information on how to squeeze the most out of your credit card if you live in Singapore