OCBC 365 Credit Card: Dismal Cashback When Minimal Spending of $800 is Unmet

The OCBC 365 Credit Card offers attractive cashback rates, including up to 6% on dining, groceries, and online shopping. However, its $800 minimum spend requirement for eligible transactions each month can be a significant hurdle at times.

While the cashback potential is high, meeting the $800 minimum spending threshold can be sometimes difficult. Recently trying to optimise my spending, I ended up with in a situation where regular expenses like dining and groceries did not add up to $800, and not all purchases qualify for cashback. For instance, spending on medical bills, entertainment, and certain services do not count. 

The pressure to increase unnecessary spending then arises, which can lead to financial strain or debt accumulation.

The real downside of not meeting the $800 threshold is the dramatically reduced cashback. If you fail to reach the required spend, there is only 0.3% cashback on all eligible transactions, which is far less than the card's usual 6% for dining, groceries, and online shopping, or even the 3% on recurring bills.

This sharp drop in cashback can make the card less worthwhile, especially for those who may not regularly hit the $800 mark. Therefore, if you’re unable to regularly meet the minimum spend, the rewards earned may just not be attractive.

While the OCBC 365 Credit Card offers great rewards for those who can consistently meet the $800 minimum spend, failing to do so leads to disappointingly low cashback. For some, the difficulty of hitting this threshold may outweigh the benefits, making it important to carefully evaluate if this card suits your spending habits.

Panic Selling, Panic Buying

The worst thing one can do is to sabotage their own financial plans by engaging in the senseless behaviour of panic selling and panic buying. The recent financial turmoil arising from the subprime crisis in the US has unnerved many investors. Just months ago, many investors were still looking at increasing their investments for fear of missing out on the attractive returns that were being dangled by the various well performing stock markets.

Why is it that we find it so much easier to invest our money when markets have headed up significantly and find it so difficult to invest our money when markets are depressed and downside is limited?

Much research had gone into analysing such investor behaviours and it largely boils down to panic buying and panic selling.

When markets are on an uptrend, the good news abound and money appears to be readily available on the tables for anyone willing to reach out for it. Investors are afraid of losing out on pocketing the potential profits with each day's delay. Speculators rush into the markets in panic buying and all sorts of equities, blue chips or not, rise across the board. Yet, when stocks are chased to sky high valuations, not many see the warning signs that whatever goes up must come down, and continue to pour cash into these already risky investments, priming themselves for major losses once the market corrects the excesses.

When the market inbalances start to even out with corrections, people rush to liquidate their investments. Granted, this is sensible behaviour for the protection of the value of the assets will enable one to re-enter the market at a later date. The problem perhaps, is knowing when to re-enter the market. When is the best time to invest again?

Panic selling results in stock valuations falling below their reasonable valuables and once investors have confidence that the valuations are extremely compelling, it should be a good time to start investing in the market again. No one knows when exactly stock markets bottom and neither will anyone know how long bearish sentiments will prevail. However, one thing history has shown us - After a period of negative sentiments and stock prices had been depressed, it is only a matter of time before stocks rebound. As long as time is on the investors' side and free cash is not being earmarked for any use in the short term, it is better to bargain pick some fundamentally solid stocks and hold on to them.

In each investor's lifetime, it is expected that there will come various opportunities whereby the market is put up for sale at fantastic bargains. The major market crashes like US Sub-Prime Crisis in 2008, SARS in 2003, dot com bubble of 2000, Asian Financial Crisis in 1997, Black Monday in 1987, Wall Street Crash in 1929... all presented superb opportunities for the brave to go against the panic selling of the masses. Investors should be rational about investing in the stock market. When the upmarket departmental store launches an exceptional sale, people rush in to grab all sorts of merchandise. When the stock market falls to extremely depressed levels, people are avoiding the market instead of picking up good discounted shares that will bring much happiness once the financial storm blows over?

In the stock market, money is not made by following the crowd. Panic selling and panic buying is not going to help grow the investment portfolio spectacularly. Exceptional returns are only available to those who are able to see beyond the fears of the common investor. Who dares win.

Investing in Bear Markets

The financial meltdown arising from subprime losses may have been the first event in a multi year economy downturn. Property prices are down, foreclosures are up, banks are getting more selective in their loans and stock markets have been on a downward trend.

Is the bear market already upon us? In the near short term, it is highly probable that stock markets are going to continue their downward trend though some bounces will occur when oversold levels are perceived.

Is it time to exit the market and hold cash instead? Cash is king but such downturns are the best investment opportunities for those with spare cash on hand. Pick up stocks with solid fundamentals. During the last downturn, the market darlings were companies with strong balance sheets or a large cash pile to back them up. Blue chips that regularly paid out dividends were also highly preferred because of the stability they accorded. It even spawned unit trusts such as First State Dividend Advantage and SGAM Singapore Dividend Growth.

Pick up stock bargains now. Go contrarian and the rewards will be reap when the economy turns around and fairly valued companies shine through.

CPF Changes for an Ageing Population

Prime Minister Lee unveiled quite a few proposed changes to the Central Provident Fund (CPF) Scheme during his national day rally speech and the changes have been debated in Parliament recently.

Quite a few changes have been proposed to address the ageing population the country is facing. Top of the list are measures to encourage re-employment of older workers, followed by increases in the CPF interest rates and lastly, and most controversial, measures to make savings last for life expectancy.

While official statistics show that more people are living till an older age, the cold hard facts do nothing to address the perceptions that these statistics do not apply to the individual. The common view on the ground is still that the government has once again moved the goalposts and made our money out of reach; everytime one moves near the markers where we can lay our hands on OUR money, the criteria is moved so that the marker moves that slightly further out of reach... Will people ever live to enjoy the fruits of their many years of labour, to pocket the money that had been kept out of their reach for decades.

Already, today's retirement age at 62 is being moved to 67. The age of 67 is definitely not cast in stone. In another decade or 2, will it be possible that the retirement age is moved even further to 70 years old or beyond? I doubt it not. It may even eventually reach a stage where retirement age is scrapped and people are given the option to work till the day they drop dead.

What about increasing the interest rates on CPF savings? An additional one percent on the first $60,000 in the CPF accounts will definitely be welcomed but the catch is that the initial $20,000 of the Ordinary Account can no longer be invested under the CPF Investment Scheme for higher returns. Furthermore, the Special, Retirement and Medisave Accounts (SRMA) will no longer offer fixed interest rates but instead be pegged to a long term bond rate.

Not being able to invest the first $20,000 of the OA is likely to impact the potential returns that can be obtained by those who are financially savvy. Utilising the money to buy into stable dividend-paying blue chips is highly likely to yield returns beyond 3.5%. The long term bond rate is also an unknown. Will it better the 4% that CPF currently pays on the SRMA? While past data appears to indicate that CPF members will be able to expect similar or better returns, the standard disclaimer that appears on brochures of financial products must be kept in mind - Past performance are not necessarily indicative of future performance.

The one proposal that really got everyone talking is that of making longevity insurance compulsory. While this is still tentative and a committee had been setup to look at it, I really hope that the committee will eventually propose that it not be implemented. The basic idea is to get every CPF member to buy into an annuity scheme so that those who do live beyond 85 will be guranteed an income for life. Yet again, there is a catch to this. The proposal in its current form will see CPF members paying for the annuity and getting nothing back if they die before the age of 85. Why should the government stipulate how I should use MY money to subsidise others whom had not planned for their own longevity? The intention behind CPF was that individuals will be self sufficient and fund their OWN retirement with the government stepping in to help those who are unable to help themselves. The oft quoted slippery slope of welfare appears to be being tested here. While sounding selfish, there is no reason why I will want to fund the longevity costs of someone whom I do not know. If I die, my assets should be directed to the benefit of those related to me, those whom I will be most concerned about.

Personally, with the exception of the longevity insurance, I am fine with the CPF changes proposed. In reality, CPF is a retirement scheme that will not suffice to fund a comfortable retirement. For those who can, they must make alternative plans to ensure a reasonable standard of living upon retirement. Eventually, with the constantly moving criteria, being able to lay our hands on the CPF money needs to be considered a bonus. But! DO NOT dictate that I should spend my hard earned money funding the needs of someone whom had not taken pains to need his own retirement needs.

POSB MySavings Account

Never before have I been so keen to take up a promotion I received via email. Within 30 minutes of receiving the POSB MySavings Account emailer, I was drawn to the flexibility and higher interest rates being offered and submitted my application online for an account.

What exactly is it about MySavings Account that is so attractive? For a huge bulk of us, POSB/DBS had remained our main bank because of the legacy of POSB being a people's bank. That implies that much of our cash is lying in standard savings account earning measly 0.25% p.a. interest. MySavings Account actually offers a way out by dangling special interest rates as high as 1.5% per annum, 6 times higher.

$50 - $290 : 0.45%
$300 - $790 : 1.00%
$800 - $1,490 : 1.20%
$1,500 - $3,000: 1.50%

What's more is that there is flexibility to increase or decrease the monthly savings amount and even amend the monthly savings date anytime.

I went for the 2nd tier amount in order to enjoy the 1% interest rate but there is a small catch for those who bother to read the fine prints. Depositors who open a MySavings Account with at least $420 monthly savings amount can get a $42 dining voucher at Raffles The Plaza but the cost of the gift may be debited if the MySavings Account is closed or the monthly savings amount is reduced within a year after account opening. My advice is to start the MSA account with a monthly amount of $410 or less to avoid getting this "free" gift unless you belong to the group who is able to commit to a large monthly amount for higher interest rates. Being greedy for this "free" gift may jolly well end up making you worse off if you ever need to close the account within a year.

CPF Minimum Sum, Medisave Minimum Sum to Go Up

From the first of next month, Singaporeans turning 55 years old will have to leave $99,600 in their CPF accounts under the Minimum Sum scheme. The amount is $5,000 more than the current minimum sum of $94,600 and will will apply to CPF members who turn 55 between 1 July 2007 and 30 June 2008.

Those who set aside the $99,600 fully in cash will receive a monthly payout of $790 from age 62 for about 20 years.

Likewise, the Medisave Minimum Sum will also be increased with the new amount being $28,500, up by $500. At the same time, the Medisave contribution ceiling will also be raised by $500 to $33,500.

As usual, many people will complain about the increase in CPF minimum sum since it is their money that has been "locked up". However, if we look deeper into the higher minimum sum, the raise in minimum sum will likely have effect on 2 different distinct groups of people, the low income and middle income groups. High income earners can be effectively exclude from any analysis since CPF is not likely to suffice to meet their retirement needs and they should have had pursued alternative wealth management opportunities.

For the low income group, the raise in minimum sum will better assist them in building a dependable source of retirement funds. With an ageing population, such self reliance during retirement has a wider impact on society as a whole. Taxes can be controlled at lower levels as the working population will not have to totally shoulder the burden of providing for the retired.

For the middle income, they have been increasingly feeling the squeeze of not getting the benefits provided to the poor while striving to attain and maintain the luxurious lifestyle so envied of the rich. In the course of this pursuit, the middle income group had frequently stretched their means to the last dollar. Of course, there is also a subgroup within this strata whom live well within their means and have little issues preparing for retirement but again, it is important to focus on the fact that CPF is a basic scheme to help in retirement and those who are able to should jolly well enhance their retirement income via other avenues.

What the raise means is actually rather trivial if we consider that CPF savings does attract interest of at least 2.5% and 4% for the Ordinary and Medisave accounts respectively. The impact of these raises is most acutely felt by those who are already nearing retirement age but for those who are still active in the workforce, the compounding effect of returns over time can be harnessed to enhance the CPF sums. 2.5% and 4% are the minimum guaranteed returns but if idle sums are properly invested into the right vehicles, it will not be difficult to double the returns of the Ordinary Account and get annualised returns of 5% or more.

Fairprice Plus Savings Account and Credit Card

FairPrice Plus is a collaboration between NTUC FairPrice Co-operative Limited (NTUC FairPrice) and Oversea-Chinese Banking Corporation Limited (OCBC Bank) with all banking products and services being provided by OCBC Bank unless stated.

This collaboration seeks to offers simple banking solutions at all FairPrice supermarkets islandwide.

This is a very new player on the banking market but it is worth taking a good look because of various interesting features...

The Fairprice Plus Savings Account provides an interest rate of 1% p.a., much higher than that offered by most banks. Futhermore, there is no minimum opening balance, monthly balance requirements and monthly service charge and with this account, there is access to over 770 OCBC and UOB ATMs islandwide!! Being able to earn 1% interest from the first dollar deposited is something that had not been available to many in a long long time.

Sounds good so far? There is more to come! The Fairprice Plus credit card offers free membership into LinkPoints loyalty program and gives 2 LinkPoints per $1 spent at FairPrice Plus Stores... It even offers 1 LinkPoint per $2 spent for VISA transactions!

FairPrice Plus hopes to stay steadfast to the values of Value, Simplicity and Transparency and I do think that this offer is a very good start. With the entry of such a competitive offering, hopefully it can help shake up the banking sector and get incumbent banks to start revising up their interest rates for basic saving accounts.