Hong Leong Doubling Interest Rates Promotion

Hong Leong Doubling Interest Rates Promotion
Valid Until 30 June 2016



Hong Leong Bank recently introduced the Doubling Interest Rates Promotion for its Current Account / Savings Account (CASA). In order to benefit from this promotion, your average balance for the current month must be higher than the average balance of the previous month.

To be eligible for the Bonus Interest, the Participants must show positive Monthly Account Growth by increasing the DAB in their Participating Accounts in four (4) consecutive months from the month of Successful Registration, failing which, the Bonus Interest Rate will reset to start from Participating Month 1 i.e. 0.5% p.a. for an Incremental Accounts Balance of up to RM2,500, followed by Participating Month 2 at 1% p.a. for an Incremental Accounts Balance of up to RM5,000 and so on, until the end of the four (4)-month period from the month of Successful Registration.

More info on the promotion


DAB = Sum of daily end day balances in each Participating Month
                     Number of days in each Participating Month

Monthly Account Growth = DAB of current Participating Month – DAB of previous Participating Month

The baseline to calculate Incremental Account Balance for each Participating Month is the last day closing balance in the Participating Account one (1) month prior to the month of Successful Registration.

E.g. 1
An existing customer successfully registers with HLB on 16 March 2016. The baseline is closing balance of RM5,000 on 29 February 2016.

E.g. 2
A new customer successfully registers with HLB on 16 March 2016. The baseline is closing balance of RM0 on 29 February 2016.


Incremental Account Balance (IAB) = DAB - Baseline

Only Incremental Account Balance (IAB) up to a maximum of RM2,500 per Participating Month will be eligible for the Bonus Interest i.e. no bonus interest will thereafter be rewarded for any Incremental Account Balance exceeding RM2,500.

Full Terms & Conditions


Maximizing the interest from the promotion

Out of all the CASAs offered by Hong Leong Bank, one of the accounts with the highest interest rate is Hong Leong Pay & Save Account. Read my earlier post here if you are not familiar with this account.
   
I will show you how to maximize the interest from the promotion with the interest from Pay & Save account. In order to fully maximize the interest you can get from the promotion, you will need to deposit RM2,500 monthly in the beginning of each month and ensure the IAB is RM2,500 for the 1st month, RM5,000 for the 2nd month, RM7,500 for the 3rd month & RM10,000 for the final month. 

In order to get 2.35% interest from Pay & Save account, you need to perform 15x e-Payments in a month. You can achieve it by doing online IBG transfer (FOC this year) to your account with another bank & transfer it back on the same day using IBG/IBFT from the other bank (charges vary depending on the bank). That way, your balance for the day remains the same. Do take note of the IBG cut-off time though.

The table below shows the total interest rate of Pay & Save account combined with the promotion's bonus rate.

It would be easier for new-to-bank customers to calculate the IAB as their baseline would be 0 if they open the new account & participate in the promotion in the same month. For them, IAB = DAB. They just need to deposit RM2,500 every month for four months in the beginning of the month and leave the money there untouched. If they do not use their account for anything else other than to transfer the money out & back in on the same day to get the maximum e-Xtra interest, they would get 2.85% interest for the 1st month, 3.35% for the 2nd month etc.

For existing customers, it would be more tricky. They need to identify the baseline first. Then deposit RM2,500 extra on top of the baseline every month for four months in the beginning of the month and leave the money there untouched. Everything else is the same as new-to-bank customers. Instead of the whole amount getting the interest above, only the IAB gets the 2.85% for 1st month, 3.35% for 2nd month etc.

Of course, it is not necessary to deposit the money in the beginning of every month & leave the money there untouched. You can do it anytime in the month but then the amount you deposit must be more than RM2,500 to get the maximum interest since the DAB would be lower if you deposit the money later in the month. You can perform other transactions as well but then you would have to calculate the DAB yourself to determine how much money you need to deposit into the account. You can even swipe your debit card 5 times to get extra 0.6% interest for your Pay & Save account if you don't find it too troublesome. If you do that, you will get 6.65% interest for the final month.

You don't have to do everything above to benefit from the promotion, it's up to you to decide how much you are willing to do to get higher interest rate. You can keep it simple and still earn some extra interest just by topping up your account with fresh funds or you can do just a few transactions more to earn more interest. Or you can go all the way to maximize every sen out of it if you don't mind the complexity & hassle involved. Just remember to register through SMS first.   



Coming soon

If you do not find this promotion confusing & troublesome, stay tuned for the next post where I will show you how to combine this with Maybank's GIA-i to earn more than 4.5% p.a. effective interest rate for 4 months which is better than any FD promotions out there.

Update:
The next post is ready. Click here to read how to earn more than 4.5% p.a. effective interest rate.

Earn more than 4.5% p.a. effective interest rate with CASA promo & GIA-i

In this post, I will show you how you how to earn more than 4.5% p.a. effective interest rate for RM10,000 for 4 months which is better than any of the FD promotions available now.

It requires some work on your part to maximize the return. I admit it is quite a hassle to get the maximum interest from this. If you are the type of person who hates complicated stuff & do not wish to waste time to get some extra interest, then I suggest you stop reading now. If you don't mind going through some trouble to earn more interest, please read on to find out how to achieve that.

In order to get more than 4.5% interest, we need to combine Hong Leong Doubling Interest Rates Promotion with Maybank's General Investment Account-i (GIA-i).

Current Account + GIA-i Combo

Accounts involved:
1) Hong Leong Pay & Save Account (P&S) (eligible for protection by PIDM)
2) Maybank's General Investment Account-i (GIA-i) (NOT eligible for protection by PIDM, interest & principal NOT guaranteed)

Promotion: Hong Leong Doubling Interest Rates Promotion

Promotion Period Until: 30 June 2016

Fund: RM10,000

Tenure: 4 months

Effective Interest Rate: > 4.5% p.a.


In my earlier blog post, I have written about the Hong Leong Doubling Interest Rates Promotion. Read it first if you have not to get a better understanding on how the promotion works. Otherwise, you would not be able to understand how this works. You also need to have an understanding of General Investment Account-i (GIA-i) to understand how it works & the risks involved. If you do not find the Hong Leong promotion too confusing or too much hassle and you are comfortable with the risks involved with GIA-i, then let's continue.

If you have RM10K with you now, instead of putting it into FD, you can split the money into P&S (Hong Leong promotion) & Maybank's GIA-i. The reason you need to split the money up is because the bonus interest rate for HLB promotion only applies to a maximum of 2.5K fresh fund per month. So the balance of 7.5K needs to go somewhere else if you want to maximize the interest.

Start by depositing 2.5K into your P&S account and the balance 7.5K into GIA-i. In the beginning of next month, withdraw 2.5K from GIA-i & deposit into P&S. Repeat monthly until you have 10K in your P&S account. You can do this online if you have online banking accounts with both banks. Refer to the table below for the balance in P&S and GIA-i respectively for the different months.

Then, perform 15x online IBG each month (for 4 months) to get the maximum e-Xtra interest rate of 1.9%.

The table below shows the interest you will get from both the P&S account (during promotion) and GIA-i account and the effective interest rate assuming you register in April. For simplicity sake, the interest is not compounded and the balance is assumed to be 0 on 31/3/2016. For your information, the bonus interest for the promotion is only credited a few months later. The interest for P&S follows its normal crediting cycle while for GIA-i, the interest is credited monthly.

Click on the image for a larger version

As you can see from the table, the effective interest rate is 4.51%. If you take compounding interest into account, the effective interest rate is slightly higher at 4.52%.



Taking it further

Click on the image for a larger version

You can take it further by swiping your debit card (min RM30 per swipe) for 5 times a month every month (for 4 months) to get extra 0.6% interest. Refer to the table above. The effective interest rate would then become 4.88%. If compounded, it would be close to 4.9%.

Personally, I think it is too much hassle to get the extra Debit Card bonus interest. If you have an existing credit card with cashback / rebate, you would need to calculate the difference between the extra interest & the rebate lost by using the debit card to see if it is worth the effort. You would also need to adjust the amount you need to deposit each month to take into consideration the amount you are going to need for your debit card spending. Then calculate the IAB accordingly.


Alternatives

If you are not comfortable with GIA-i's risks, you can substitute it with a 1-month Fixed Deposit (FD) or other Current Account / Savings Account (CASA). Of course, the effective rate would be lower since FD & CASA offer lower interest rate compared to GIA-i. FD is less flexible than GIA-i as you need to complete the entire 1-month tenure to get the interest or else you will not get any interest at all. So, you need to be aware of the placement date & maturity date and make sure it coincides with the beginning of the month. CASA is the most flexible but the interest rate is usually the lowest.

Hong Leong Pay & Save Account

In this post, I will write about Hong Leong Pay & Save Account which in my opinion is one of the best current accounts in Malaysia currently. For one, you do not need an introducer to open this account. You only need a minimum of RM200 to open the account. It is one the current accounts offering the highest interest rate in Malaysia. It is a very flexible account but can also get pretty complicated if you want to fully maximize the interest rate.
 
There are basically three types of interest that would be applicable to the general depositor.
They are: -

1. Savings Interest
2. e-Xtra Interest
3. Debit Card Bonus Interest

Savings Interest

Interest calculated daily & credited quarterly.


e-Xtra Interest

Applicable when you make a minimum of 4 e-Payments.
 
Interest calculated based on the Monthly Average Balance (“MAB”) of the Account at the end of the month and credited on the first of the following month. The maximum e-Xtra Interest you can earn is 1.9% p.a (perform 15 or more e-Payment and/or PEx transactions in a month).

Tips:
You might think that you do not have so much bills to pay & therefore cannot maximize the extra interest here. However, you could perform online IBG transactions (minimum RM100 per IBG) which would also count as an e-Payment. By the way, HLB is offering free online IBG this year. So, you can take advantage of it to transfer funds to your own account in another bank and earn extra interest.


Debit Card Bonus Interest

To qualify, each swipe must be successfully posted with a minimum spend of RM30 in a single receipt. 

Interest is calculated based on the Monthly Average Balance (“MAB”) of the Account at the end of the month and credited on the first of the following month.

Capped at RM30 per month.

Tips:
If you are currently using a credit card to make purchases, you need to consider the rebate (if your current credit card provides rebate / cashback for purchases) you will lose out if you were to switch over to using Hong Leong debit card. Consider the difference between the extra interest you will earn vs. the rebate you will lose by not using your existing credit card. If you are not using credit card, I do not see any reason not to use the debit card as you will earn extra interest up to a maximum of 0.6% p.a. extra interest (5 swipes & above). Do note however if your account balance is really high, you might not get the maximum 0.6% extra interest as there is a monthly cap of RM30 for Debit Card Bonus Interest. 


Charges

Debit Card Issuance Fee: RM8.48 (Waived for first year)

Service Charge where average balance for half year is below RM200: RM5.30


Summary

The table below shows the total interest rate (base interest + e-Xtra interest) for different balances assuming you are able to maximize the e-Xtra Interest: - 

Assuming your account balance is RM2,000 and no. of e-Payments for the month is 15 (15 IBGs), the total interest you will get for the month is 2.35%. If your balance is more than RM20,000, then you will get 2.90%.

This does not include the the extra interest from Debit Card Bonus Interest which can go up to 0.6%. I did not include the Debit Card Bonus Interest in the table above as there is a cap on the extra interest. Based on my calculation, for account balances of up to RM20,000, you can earn the maximum 0.6% extra interest. For balances above that value, the maximum extra interest rate varies depending on the monthly average balance & the number of days in the month. It's pretty complicated, you can go calculate it yourself if you want to. 


Possible uses

• Day to day account to receive your salary & make payments. You might even get 10% p.a. Bonus Interest for 5 days when you use this account for salary crediting via Hong Leong e-Payment Service (Payroll Account). Your employer need to register for it though in order for you to get the 10% Bonus Interest.

• Temporary place to park your excess funds as you can withdraw them anytime. The online transfer limit is RM50,000 and this account also comes with an optional cheque book facility. If your balance is above RM100,000, you can get 3.20% or more interest.

Refer to the following links for more information about the rates, charges & how the interest is calculated: -

Official link

Terms & conditions