DBS Bank has unveiled what is believed to be a first-of-its-kind programme where retail customers earn higher interest based on how much banking they are doing with DBS, which even includes spending on their credit cards.
The "multiplier programme" is aimed at fairly well-off customers with at least $7,500 flowing through their accounts a month.
For example, if a customer gets a $4,000 salary payment in his DBS account, spends $1,500 on his DBS credit card, pays $1,500 on a DBS mortgage and gets another $500 in dividend payments in his Central Depository account, he qualifies. In that case - with the minimum $7,500 going through his accounts - he gets paid 0.98 per cent interest a year on that figure. With a multiplier account balance of $50,000, that works out to $40.27 interest.
The highest rate of interest on offer is 2.08 per cent. A customer needs more than $20,000 flowing through his accounts a month to be paid that rate, which works out to about $85.48 for a $50,000 account balance.
The aim is to persuade customers to do all their banking at DBS.
A spokesman said the programme encourages customers to have "a more extensive banking relationship with DBS for greater rewards instead of juggling multiple banking relationships".
The bank estimates that based on existing cash flows, 900,000 or more of their 4.5 million customers qualify for higher interest rates. The interest rates on offer are well above market rates.
The average interest rate for bank savings deposits last month was 0.12 per cent, the Monetary Authority of Singapore's monthly statistical bulletin showed.