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.
Thursday, October 31, 2013
Thursday, October 17, 2013
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.
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.
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