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If in case you have 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now you can activate a “cash lock” function to lock up a portion of your funds in order that it can’t be transferred or withdrawn.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 dangerous information is, when you’re on DBS / UOB, you’ll have to consider whether or not you’re keen to surrender your (larger) curiosity in change for this extra safety.
Background: enhanced safety wanted to thwart scammers
The rise in banking scams right here in recent times have led to many Singaporeans shedding their lifelong financial savings, or retirement funds. Final yr, more than S$330 million was siphoned out of victims’ bank accounts here, with Singapore victims losing the most to scammers globally. What’s extra, the profile of victims have modified as it’s not the aged who fall prey, and according to the Singapore Police Force, young adults are now the most likely to be cheated in scams.
This has been heavily discussed in Parliament, with a useful consequence being that our 3 native banks have now moved to launch a “cash lock” function on deposits. This enables prospects to “lock up” their funds in order that they can’t be transferred out, thus safeguarding depositors’ hard-earned monies whilst scammers proceed to evolve their rip-off techniques to cheat extra unwitting victims.
In current weeks, all 3 native banks have launched their “cash lock” function, though every comes with totally different executions. Essentially 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 number 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 must forfeit (larger) 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 totally different strategy, ensuing of their prospects having to decide on between higher safety (by locking up their funds) or larger curiosity (with out locked funds).
So earlier than you resolve to lock up your funds or which financial institution to lock it up with, please learn to grasp how every of them work, and the trade-offs concerned in every methodology:
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 have to to personally go to a DBS/POSB department to boost a request and confirm your id earlier than you may “unlock” and switch funds again to your private account to liquidate them.
| Tips on how to lock? | – Open up a digiVault and deposit your funds into the account. – Funds in digiVault can’t be digitally transferred out. |
| Tips on how to unlock? | You will want to go to a DBS/POSB department in-person and confirm your id 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 possibly can open up a number of digiVault accounts (e.g. in your financial savings vs. your fastened deposits). Nonetheless, solely the primary digiVault account can be eligible for the bonus further curiosity.
The 1.8% p.a. curiosity appears to be like 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 may be getting when you 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 present DBS excessive yield financial savings account(s)? You’ll must resolve.
OCBC Cash Lock
In distinction, OCBC prospects 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, for the reason that function is obtainable 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 had 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. Because of this, 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. |
| Tips on 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 when you urgently want your funds, unlocking can also be a breeze as it may be finished at any OCBC ATM just by utilizing your bodily ATM debit or bank card, and your PIN. And when you’re abroad, you may submit a request by way of the Secured Mailbox within the OCBC Digital app or Web Banking for a customer support consultant to contact you as a substitute.
UOB LockAway
Much like DBS, you have to to open a brand new account – UOB LockAway – and switch in your funds that you just want to lock up. Account opening can simply be finished on-line or by way of 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 won’t be issuing any debit card or ATM playing cards for UOB LockAway accounts.
| Tips on how to lock? | – Open a UOB LockAway account on-line or at their department. – Switch in your funds to be locked. |
| Tips on how to unlock? | You will want to go to a UOB department in-person and confirm your id 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 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 when you had been to lock up a sizeable sum (greater than $125k), the utmost Efficient Curiosity Fee (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 prospects be made to decide on between locked safety vs. larger curiosity?
Whereas I can perceive that from a industrial standpoint, this may seem to be 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 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 prospects to lock their funds whereas persevering with to take pleasure in their bonus rates of interest.
Why can’t DBS/POSB prospects lock their funds and proceed to earn the (larger) rate of interest from their DBS Multiplier or POSB SAYE accounts? Why can’t UOB prospects 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 a superb 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 must handle and take care of one more checking account)
- I can nonetheless take pleasure in 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 effectively, I can solely hope that the opposite banks will take a leaf out of OCBC’s books and roll it out in such a manner in order that their prospects don’t have to decide on between sustaining their larger curiosity vs. locking up for higher safety.
But when they don’t…effectively, no less than there’s nonetheless OCBC we are able to use.
With love,
Finances Babe
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