As you know, some banks have savings deposit promotions that offer higher interest rates for a short period of time. The caveat, however, is that the funds must be fresh deposits from some other banks. Previously, although Maybank had such promotions, I was not too keen on moving funds across banks to take advantage of them. This is because effectively, you could only enjoy the promotional rates only half the time, as you have to keep the funds in other banks the other half of the time. But when UOB (where I also have an existing savings account) joined the battle for fresh funds in May, I decided it was now worth the efforts to two-time the banks and enjoy promotional rates for almost the entire year. After all, there are no rewards for being a loyal long-term depositor to the banks!
The reason why you can enjoy promotional rates almost round the year is because the banks repeat the promotion every few months. Each bank has a different cycle. UOB has a 2-month cycle, i.e. May-Jun, Jul-Aug, etc., whereas Maybank has a 3-month cycle, i.e. Apr-Jun, Jul-Sep, etc. Below are the current promotions by UOB and Maybank respectively.
The reason why you can enjoy promotional rates almost round the year is because the banks repeat the promotion every few months. Each bank has a different cycle. UOB has a 2-month cycle, i.e. May-Jun, Jul-Aug, etc., whereas Maybank has a 3-month cycle, i.e. Apr-Jun, Jul-Sep, etc. Below are the current promotions by UOB and Maybank respectively.
 |
| UOB's Promotional Rates for Fresh Funds (Sep-Oct) |
 |
| Maybank's Promotional Rates for Fresh Funds (Jul-Sep) |
To take full advantage of the promotions, you need to understand what constitute fresh funds. Each bank has a different rule. For UOB, using their own words for the current promotion for Sep-Oct, “Incremental Fresh Funds Balance is calculated on a daily basis as each day-end Account Balance less the Account Balance as at 31 Aug 2015". The key word here is "31 Aug 2015" or the last day of the 2-month promotion period. So theoretically speaking, you could keep the funds in UOB until the second last day of the 2-month period, withdraw it, and re-deposit it back into UOB on the first day of the next 2-month period and still qualify as fresh funds. Effectively, you could enjoy promotional rates for all except 6 days in a year from UOB! Actually, this is the best deal, even better than the two-timing strategy described below.
For Maybank, again using their own words for the current promotion for Jul-Sep, "Incremental Balance in the Account refers to the difference in the average daily balance during the Promotion Period as compared to the average daily balance in the Account for the month of June 2015". The key words here are "average daily balance for Jun 2015" or average daily balance for the last month of the 3-month promotion period. Likewise, you could keep the funds in Maybank for the first 2 months of the 3-month period, withdraw it, and re-deposit it back into Maybank on the first day of the next 3-month period. Effectively, you could enjoy promotional rates from Maybank for 8 months in a year.
How do you two-time the banks for higher interest rates for longer periods? The figure below shows how to move funds from one bank to another.
 |
| Fund Movement Across Banks |
Each block for the banks in the figure represents their respective promotion periods. For UOB, it has 6 blocks of 2 months each, while Maybank has 4 blocks of 3 months each. The red line/ region for each bank represents when funds in the banks are reset and no longer considered "fresh". As explained above, UOB resets it on the last day of the 2-month period, hence it is represented by a red line at the end of the block. If funds are kept in UOB beyond the red line, they are no longer considered "fresh" for the next promotion period. Maybank resets it based on the average daily balance of the last month of the 3-month period. If you keep the funds for only 1 day in the month, the average daily balance would be quite low. But the longer you keep the funds there, the higher is the average daily balance. Thus, it is represented by a region that is increasingly red. Again, if you keep the funds in Maybank across the red region, they are no longer considered "fresh".
Starting with UOB, the funds would be moved there in Jan and you could enjoy UOB's promotional rates for Jan and Feb. In Mar, move them to Maybank which is in the midst of the Jan-Mar promotion. You could enjoy Maybank's promotional rates for Mar only, as they are not considered "fresh" for the next promotion starting in Apr. In May, move them back to UOB to take advantage of the May-Jun promotion, then move them again to Maybank for the Jul-Sep promotion. However, do not keep the funds there for the entire 3 months. In Sep, move them to UOB for the Sep-Oct promotion and finally in Nov, move them back to Maybank. Overall, the funds are considered "fresh" for 11 months in a year :) You could also start the analysis with Maybank in Jan and perform the same movements every 2 months. The net effect is the same: 11 months of "fresh" funds and promotional rates.
By right, the banks should treat all deposits equally and offer the same promotional rates to existing funds as well as fresh funds. Since the banks do not reward long-term loyalty, we just have to play against the banks to get the same preferential treatment.
By right, the banks should treat all deposits equally and offer the same promotional rates to existing funds as well as fresh funds. Since the banks do not reward long-term loyalty, we just have to play against the banks to get the same preferential treatment.
In relationship, two-timing is a big NO!
ReplyDeleteOther than this, two-timing is probably okay within the applicable t&c.
When moving out stale funds to another bank, be sure not to close the account with the former bank as there is $30 penalty as early account closure within 6 months.
When moving out funds to another bank, be sure to keep an average $500 daily average balance behind; so as to avoid fall below balance fee.
You have pointed out important points to note when making the transfers. Thks.
DeleteThis is really smart! Thanks for sharing :)
ReplyDeleteNo problem. I've also seen your blog. I'm impressed that such a young lady as yourself could be so clear and determined in your financial objectives. Keep up the good work!
Delete