Standard Chartered (SC) recently revamped the interest rate for their JumpStart account.
It now offers higher base interest plus an option to earn additional interest.
In today’s post, I’ll take a closer look at these changes and compare how it currently fares against other savings accounts.
Here’s a short refresher of what the JumpStart account is.
It’s SC’s savings account that is targeted at young adults.
Only customers between the ages of 18 and 26, both inclusive, are eligible to open an account.
Once they’ve passed the age of 26, they’re able to keep it open and continue using it.
It’s a no-frills savings account with no requirements to start earning interest, but only awards interest on the first S$20k account balance.
There is no minimum account balance and no account-related fees.
It also comes with a debit card that earns 1% cashback on eligible Mastercard transactions, capped at $60/month.
1: Base Interest Rate Increase
First of all, the JumpStart account’s interest rate has been increased to 0.5%, up by 0.1% from the previous rate of 0.4%.
While this is still far from its original interest rate of 2% back in the day and is by no means anything worth shouting about, it’s still better than nothing.
There’s no change to the way that the JumpStart account works.
As before, only the first S$20k account balance is eligible to earn interest and there are no other requirements to earn the base interest of 0.5%.
So the JumpStart account continues to be a simple, no-frills savings account.
2: Bonus Interest Rate For Investing
This is where the JumpStart account is adding something new.
Customers who invest with SC will be eligible to earn a bonus step-up interest of 0.5% on their account balance, bringing the total interest earned up to 1%.
This mechanic is similar to that of other high-interest savings accounts like DBS’s Multiplier account or Standard Chartered’s Bonus$aver account where you have to fulfil the criteria on a monthly basis.
For each month that you fulfil this additional investment criterion, you will be eligible to earn the bonus step-up interest of 0.5% for that month.
Like the base interest, the step-up interest is only applicable on the first S$20k account balance and will be awarded based on the average daily balance (ADB) for the eligible month.
ADB is calculated by taking the sum of the end-of-day account balances for each day in the month divided by the number of days in the month.
In order to qualify for the investment criterion to enjoy the bonus interest, you need to perform one of the following:
- invest in an eligible Unit Trust (UT)/set up a Regular Savings Plan (RSP), or
- invest in equities by placing 1 buy order
To fulfil the RSP criteria, you don’t need to set up a new RSP each month – simply having an existing RSP will suffice.
I confirmed this with an SC customer service officer to clarify the ambiguity of the condition.
Also, RSPs are only available for UTs, just that instead of investing a lump-sum, you dollar-cost-average into the UT of your choice over a period of time.
Remember that you need to perform either 1 of these actions for each month that you want to earn the step-up interest for.
For either of these investment criteria, the orders must be placed and settled within that calendar month in order to qualify for the step-up interest.
You can find the full terms & conditions for the step-up interest here.
How Does It Compare?
To Other Bank Accounts
As a no-frills savings account, the JumpStart account is definitely better than similar accounts offered by other banks.
It’s good enough to compete with high-interest accounts like DBS Multiplier and SC Bonus$aver.
Since high-interest accounts often have multiple criteria that can be fulfilled to stack bonus interests, I’ll do 3 rounds of comparison.
For the first round, I’ll only assume that the salary crediting criterion is met.
For the second round, I’ll assume that an extra criterion is met, ie credit card spending.
For the third round, I’ll also assume that the investing criterion is met.
Since OCBC 360 doesn’t use credit card spending as a criterion, I’ll assume that the Save criteria, ie increasing the ADB by $500, is met instead.
The criteria and respective amounts are listed below
- account balance = S$20k
- investment amount = S$500
- salary crediting = S$3k
- credit card spending = S$500
#1: Salary Crediting Only
#2: Salary Crediting + Card Spending
#3: Salary Crediting + Card Spending + Investing
Interestingly enough, the JumpStart account offers higher interest than the high-interest accounts under similar conditions.
But the caveat is that this comparison is done in favour of the JumpStart account – that is, for account balances of up to S$20k only.
Why do I say that?
Well, some bank accounts offer progressively higher interest rates as your account balance/total transaction amount increases.
For example, the OCBC 360 account offers higher tiers of interest rates as your account balance increases, allowing you to earn higher interest than stated above.
Similarly, the DBS Multiplier account offers higher interest rates as your total qualifying criteria amount increases.
So if you’re choosing between these accounts, remember to take such factors into account.
Note that even though investing is a criterion that unlocks bonus interest for the OCBC 360 and SC Bonus$aver accounts, they require a large investment sum to qualify for the bonus interest, which isn’t met in this example.
To Savings Account Alternatives
Besides regular bank accounts, there are other options available where we can park our savings to earn returns.
This includes insurance savings accounts like Singlife and cash management accounts like Syfe Cash+.
Let’s see how the JumpStart account fares against them.
As you can see, the JumpStart account doesn’t fare nearly as well against these accounts.
That’s because these accounts are different in nature as compared to the JumpStart account.
I recently wrote a post about these savings account alternatives which you can check out here if you’re interested.
Is It Worth Using?
So, with the recent update to the JumpStart account’s interest rates, is it worth using?
Personally, I’d say yes – at least, for the base interest.
As illustrated above, the JumpStart account’s interest rate is actually the best on the market now for the conditions that it’s suited for, surpassing the interest rates from other high-interest accounts.
Remember that the JumpStart account is a strictly no-frills savings account that simply awards interest on balances up to $20k.
There is no minimum account balance, account fees, or criteria required to earn the base interest of 0.5%, which are things that most high-interest accounts have.
Plus, it comes with a debit card that awards 1% cashback on eligible card spending, which can be stacked with the GrabPay card to double-dip on rewards.
Since everyone needs at least 1 or 2 bank accounts, using the JumpStart account as one of them is definitely an excellent choice.
The next question, then, is whether the step-up interest is worth going for.
Earning the bonus step-up interest requires investing with SC either via:
- Unit Trusts/Regular Savings Plans, or
- Online trading
Unit Trusts/Regular Savings Plans
I’ll admit that I’m not too knowledgeable about UTs and I’m not familiar with the funds that SC offers.
According to the customer service officer that I spoke with, most of the UTs have a minimum initial investment sum of S$1000, and most of the RSPs have a minimum monthly contribution of $100.
Note that these sums may be higher depending on the UT that is selected, and that the RSP contribution is usually in the same currency the fund is denominated in.
I’m not a fan of UTs in general because the fees involved tend to be high as compared to ETFs.
The management fee for UTs tend to be higher than the expense ratio for many ETFs because UTs are actively managed, incurring more active work.
And, personally, I’m not convinced that active management is able to consistently outperform index investing.
Furthermore, there may be sales charges involved which are additional fees that are applicable to investors – something that ETFs don’t charge.
So I wouldn’t consider investing in UTs just for a bonus 0.5% interest.
SC Online is SC’s online trading platform where customers can buy and sell shares.
At least 1 buy order must be placed and settled in order to qualify for the bonus step-up interest, so let’s take a look at what it costs to place a buy order.
|Currency of Shares
|0.20%, min 10 SGD
|0.25%, min 10 AUD
|0.25%, min 10 CHF
|0.25%, min 10 EUR
|0.25%, min 10 GBP
|0.25%, min 10 USD
|0.25%, min 100 HKD
|0.25%, min 1000 JPY
Note that the fee schedule listed above is for personal banking customers.
Private banking customers enjoy lower commission fees with no minimums.
You can find the full fee schedule here.
The commission fee structure for SC Online is different from most brokers.
Usually, the commission fee is dependent on the exchange where a trade is taking place.
But for SC Online, it is dependent on the currency in which the share that is being traded is denominated in.
As you can see, the fees are high (~$10) compared to other online brokers like Interactive Brokers or Tiger Brokers.
So, for the cost of $10/month or $120/year, you get to earn a bonus 0.5% interest on up to S$20k of account balance in your JumpStart account.
The incremental interest you will earn per year is 0.5%*20000 = S$100 < S$120.
In other words, you’d pay more in commission fees than what you’d earn in interest for fulfilling this criterion.
Clearly, it’s not worth investing with SC Online just to qualify for the step-up interest.
The JumpStart account has always been and still is a great savings account, and having its interest rate increased is good news.
While its revised interest rate of 0.5% is still a far cry from its 2% back in the day, at least it’s a step in the right direction.
While it’s now possible to earn bonus interest for investing with SC, I don’t think it’s worth it just to earn the bonus interest.
But if you are already investing with SC, or are intending to, then earning the step-up interest serves as a nice bonus.
Do you use a JumpStart account? Why or why not? Let me know in the comments below!