POSBank has a savings account by the name of MySavings. When I first opened up my MySavings account, the premise was that I would make regular monthly contribution from my regular account to this account, and get paid a higher interest rate. The interesting thing about this account was that I would be unable to make regular online or ATM withdrawals from it. The only way I had access to the account was to go to the bank and withdraw the cash physically. There is also no requirement for a minimum deposit or contribution amount, and no penalty for stopping or decreasing the monthly contributions if things get tight.
The idea, of course, was to encourage savings. Not having normal access to the account meant that there could be no impulsive spending from it. I thought it was a great product, especially for those who have problems saving, but who did not want the inflexibility of fixed savings vehicles like endowments. It also works great as a targeted savings account for a big purchase like a holiday, since one earns slightly higher interest rates than normal accounts, without tying up the money for long periods of time, like a fixed deposit.
Then one day, I noticed during a normal ATM transaction that my MySavings Account had been linked to my ATM card. I thought there was a mistake and queried the bank teller. I was told that an overwhelming number of customers had asked for easier access to the account, and POSB had decided to accede.
In my opinion, that move negated the entire point of having the separate account in the first place. I imagine most of those who asked for the access have been probably raiding the account while convincing themselves of their own virtue in setting up automatic “savings”. I don’t blame POSBank for acceding to the requests for easier; they were just practicing good customer service after all. However, a good savings product is now ruined for those who would have benefitted from some external control.
I guess this goes to show that the best financial products and financial advice in the world will not help if a person has no intention to change their financial mindset. PF bloggers can strike “Pay yourself first” and “Automatic savings” off the list of best advice. All they result in are just some elaborate money transfers that ultimately yield nothing.