POSB Offers you 1.38 percent per annum interest but only 4 months

When I alighted at the MRT station to work, I notice there is a long queue and most of them are elderly aunties and uncles. Overhearing the conversation, I realise they are queuing up for the POSB fixed deposit promotion. If you have not heard, POSB is offering 1.38% per annum bonus interest for 4 months.

Below is referenced from POSB website. In summary, what you need to do

1. Open a POSB SGD Fresh Funds Account online before 15 December 2016, 5pm.
2. Deposit fresh funds into your POSB SGD Fresh Funds Account by 15 December 2016.
3. Maintain the fresh funds deposited in the account for 4 months until 15 April 2017 inclusive.
4. The Cash Gift Interest will be credited into your reference account by 31 May 2017. Your POSB SGD Fresh Funds Account will thereafter be auto-closed and all funds will be credited into your reference account.

How much will you get?

Taking 50K deposit for example:

S$50,000 x 121 days (4 months)/365 days x 1.38% p.a. = S$228.74

You will get back S$228.74 bonus interest after 4 months.

Comparing the Promotion with Singapore Savings Bond

Lets compare with Singapore Savings Bond. If you put 50K in “SBJan17“, you will get a payout of S$227.50 in July 2017. If you hold the 50K for another half a year, you get another S$227.50.

Personally, if I have 50K, I will take up the Singapore Savings Bond instead of the POSB fixed deposit. After 4 months, the fixed deposit will be transferred back to your reference account which means interest rate goes back to the petite 0.05 per annum.

Alternatively, you should wait for the Chinese New Year 2017 fixed deposit promotion which most likely will happen in January 2017 given Chinese New Year falls at the end of January 2017.