How to earn 6.30% interest after 4 years?

Someone tried to interest me in this not too long ago:

I have forgotten about it until I saw an email advertisement recently.

Any interest in this "interest"? Well, I blogged about why it did not interest me before and if you are interested, please read related post number 1 at the end of this blog post.

What I find objectionable about this advertisement is the use of the word "interest". What do we think of when a bank promises us a certain interest rate? What do we understand by the word "interest"?

Definition of "interest":
Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

When a bank promises an interest rate of 6.3% after 4 years to us, most people would interpret it as a fixed deposit with a total of 6.3% in interest paid after 4 years (or about 1.575% per annum). If we asked any reasonable person, that would be the view. Then, if the product is not what any reasonable person think it is, we have a problem, don't we?

Read the small print:
"Because the Structured Deposit is structured with the objective of returning your initial investment amount only at maturity, repayment of your initial investment amount does not apply if you terminate the structured product prior to maturity. You may potentially lose the principal sum invested if the investment is not held to maturity. There is no unconditional guarantee of repayment as repayment is subject to the creditworthiness of the (bank) i.e. if (bank) defaults, you may lose your initial investment amount."

This is a structured deposit, not a fixed deposit. It is an investment product and not a savings product. It is very different from what any reasonable person would have thought it was looking at the advertisement.

And the disclaimer:
"You must seek your own independent advice from a licensed or an exempt financial adviser regarding the appropriateness of investing in this product, before making a commitment to purchase this product. In the event that you choose not to seek your own independent advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you. (bank) has no fiduciary duty towards you, nor does it assume any responsibility to advise on, or make any representation as to the appropriateness, suitability or possible consequences of investing in this product."

The person who served me was quite pushy and I had to give her a piece of my mind. I was there to start a 15 months fixed deposit which promised to pay an interest of 1.25% per annum.

Now, this is not the point of this blog post but, theoretically, over 4 years, if I could get paid 5% in interest by putting my funds in a fixed deposit that pays 1.25% per annum, why would I bother taking on greater risk for another paltry 1.3% "interest"?

I don't like it when advertisements are worded in ways which could mislead and this advertisement ranks highly on the AK Dislike Scale.

Related posts:
1. Why fixed deposits over structured deposits?
2. Nobody cares more about our money than we do.

Save money: Frank Card, Signature Card & Dividend Card.

My sister brings my niece to buy textbooks and other school supplies every year. It is a ritual and some of us will remember doing the same when we were school children.

One of the places that we would visit was Popular Bookshop. Over the years, they have established themselves as the most sought after school textbooks supplier in Singapore.

This is probably one reason why they have managed to survive in an industry which is so plagued by online competition that names like MPH went the way of the Dodo.

Well, I was talking to my sister about buying some Popular Bookshop vouchers online because I am able to get a 6% rebate for all online shopping with my new and funky looking OCBC Frank Card (which I got because of the OCBC 360 account). Buying $300 worth of vouchers would mean saving $18.



Click to enlarge.
https://www.popular.com.sg/jsp/gv/gv_order.jsp

My sister could then use these vouchers to buy school textbooks and other school supplies for my niece end of this year. She could also use her Popular Bookshop membership to get discounts, where allowed, before paying with these vouchers. Then, we would be getting a discount on top of a discount. Sounds good? I might buy the vouchers next month.

Then, recently, I received advice from UOB saying that I have reward points (known as UNI$) expiring next month. The thing I thought of doing right away was to exchange them for CapitaMalls vouchers simply because there are so many CapitaMalls around. So, there is always a good chance of being able to use the vouchers. There are Popular Bookshops in CapitaMalls too.

However, since Popular Bookshop have vouchers of their own, I decided to check if I could exchange UNI$ for Popular Bookshop vouchers instead. What did I find?

Wow! That is a big difference! I am glad I checked.

There is a catch with these "free" Popular Bookshop vouchers. They cannot be used with membership discounts and they cannot be used for the purchase of school textbooks. However, we can still use them for the purchase of stationery.

So, still a great deal being able to get 25% more in value for the same amount of UNI$ used. So, if you are a parent with school going kids and if you are a UOB credit card holder, you might want to take note of this.

Having said this, if your UOB card is a VISA Signature card and if you have accumulated UNI$ 4,000, there is an even better deal! What is it?

You could get a S$ 100 cash rebate (which translates to S$20 for every UNI$ 800)! This is much better than the rate for getting a S$20 voucher from Popular Bookshop or CapitaMalls.

Happy!

However, this is probably the last time I am getting any reward from my UOB Signature card as my credit card of choice now is the OCBC Frank card. I still use my Citibank Dividend card for the purchase of petrol because of the 5% cash rebate (for fuel purchases of above $50 per visit) but not much else.

Save some money if we have to spend some money? Yes, I like this.

Related posts:
1. Getting value out of everything.
2. OCBC 360 and CIMB Star Saver.
3. 7 ways AK saves money.