OCBC 6-Year SGD Interest Rate Linked Structured Deposit

OCBC terminated the 5.5-Year SGD Interest Rate Linked Structured Deposit early on 31 October 2016 after 3 years.

The bank introduced OCBC 6-Year SGD Interest Rate Linked Structured Deposit for subscription from 17 November to 21 December 2016 (depending on availability).

It is not a plain vanilla time deposit. It is interest rate-linked. Duration of SD is 6 years.

Payment of interest is half yearly as follows:

Interest rate for Year 1 is 1.88% p.a.
Interest rate for Year 2 is 1.88% p.a.
Interest rate for Year 3 is 1.88% p.a.
Interest rate for Year 4 is 1.88% p.a.
Interest rate for Year 5 is 1.88% p.a.
Interest rate for Year 6 is 1.90% p.a.

Effective interest rate if held to maturity is 1.89% p.a.

In comparison with the earlier SD (5.5 year), the interest rate is higher (1.89% vs 1.50% p.a.)

5.5-Year SD that was early terminated:

Interest rate for Year 1 is 1.20% p.a.
Interest rate for Year 2 is 1.30% p.a.
Interest rate for Year 3 is 1.40% p.a.
Interest rate for Year 4 is 1.60% p.a.
Interest rate for Year 5 is 1.80% p.a.
Interest rate for Year 6 is 2.00% p.a.

Minimum principal amount is $5,000 with multiples of $1,000.

OCBC holds the right but not the obligation to unconditionally early terminate the SD at the end of an interest period. In other words, OCBC can technically terminate this SD after half a year from start.

There is pre-mature withdrawal fee should depositor withdraws any time before the full 6-year term. Besides this, there are other risks such as issuer risk, market risk, tenor risk, reinvestment risk. SD is not covered by Deposit Insurance.

In my case, I moved from getting 1.40% p.a. interest in Year 3 of the old SD to 1.88% p.a. interest on the new 6-Year SGD Interest Rate Linked Structured Deposit.

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

Advertisements
This entry was posted in Financial Management. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s