POSB SAYE (Save As You Earn) is a special savings account that allows you to earn additional interest on your monthly savings.

The game-like mechanism compels you to save regularly every month, making it easy to start saving for students or first jobbers.

POSB SAYE account

How does the POSB SAYE savings account work? 

To benefit from the POSB SAYE account, you need to already have a DBS/POSB savings/current account in which you are crediting your salary (no minimum salary amount mentioned). This primary account will be your debiting account to your POSB SAYE account, where a fixed savings amount will be deducted each month. 

Which POSB/DBS savings accounts should you use as your main? We recommend the DBS Multiplier savings account — most people can easily earn 1.40 per cent to 1.60 per cent p.a., but the actual rate depends on your monthly transaction amount.

On the other hand, POSB SAYE automatically deducts a monthly amount each month. That way, you can develop a saving habit without lifting a finger. With the funds out of sight and out of mind in a separate account, you can’t access it easily. If you’re the type that finds it hard to keep track of your finances and have no idea where your money goes by the end of every month, this will help you save without much effort. 

After 24 months, the POSB SAYE gives you a 2 per cent bonus interest, which the bank terms “Cash Gift Interest” on top of a 0.05 per cent base interest. Take note that this interest applies to your monthly savings only. Savings can range from $50 to $3,000 and will be automatically deducted from your primary account on a date you have selected anywhere between the 1st and 25th of each month. 

Interest rate on monthly savings amount

Cons of the POSB SAYE Account 

The major downside of the POSB SAYE account is that you can’t make any withdrawal for two years to earn the cash gift interest of 2 per cent. 

The accumulated interest will be credited into your account after 12 months and 24 months, but it doesn’t mean you can withdraw funds after 12 months. The rule of the POSB SAYE account is to make consistent deposits without any withdrawal for two years. This means that you need to consider the amount you want to set aside every month carefully from the get-go, since they’d be treated almost like “fixed deposits”. 

If you already have the money on hand, you don’t need the POSB SAYE. You may consider depositing directly into a fixed deposit account, as some of the best rates now are over 2 per cent. Read more: The Best Fixed Deposit Promotions in Singapore (2022).

But if you’re truly starting from zero, POSB SAYE is a good way to keep yourself accountable. It’s especially good for first job holders who are just starting to build an emergency fund.

What if you don’t have sufficient funds in your debiting account and the savings amount did not transfer into your POSB SAYE account? Fret not, the bank will send you a reminder before the transfer date to let you know of insufficient funds in your debiting account. You just need to top it up by 7pm on the day before the transfer date of your monthly savings to keep your streak going. 

In the event of three consecutive unsuccessful transfers of your monthly savings, POSB may close your account without notice and transfer all the funds back to your debiting account. 

POSB SAYE vs UOB Stash — which is better?

Both the UOB Stash and the POSB SAYE require you to restrict your withdrawals and transfer money every month. But there is significant difference between the two.

The UOB Stash allows you to earn up to 1 per cent interest on the total amount in your savings account. The only condition is that you fulfil a monthly average balance of above $10,000. Subsequently, you can maintain or increase the monthly average balance. 

While the interest rate looks to be lower than that of the POSB SAYE account, the interest is applicable to your full savings amount and not just the monthly savings amount. 

The UOB Stash account is good if you have overflow cash above $10,000. You can stash it away with no withdrawals and earn a decent interest.

On the other hand, the POSB SAYE account is good for beginner savers – as long as you have an existing DBS/POSB account that you are crediting your salary to. And it also encourages you to keep the practice of saving consistently to earn more interest. 

How to open a POSB SAYE account

If you already have an existing DBS/POSB savings/current account, you can apply for a POSB SAYE account via iBanking. Look for “POSB SAYE Account” under the “Special Savings Accounts” tab. If you don’t have an iBanking account, you can register for one on the DBS/POSB website. 

If you don’t have an existing DBS/POSB savings/current account, one will be automatically opened for you when you apply for the POSB SAYE account. You can get instant application approval online by using your information via MyInfo.    

This article was first published in MoneySmart.