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Earn 3.4% p.a. on your CPF funds with OCBC fixed deposit. Is it worthwhile?

16 Nov 2022

OCBC now allows you to earn 3.4% p.a. with a 12-month fixed deposit using your CPF Ordinary Account (CPF OA) funds.


OCBC now allows customers to make a deposit with their CPF Ordinary Account (CPF OA) funds and earn 3.4% p.a. for the 12-month SGD Time Deposit.

The CPF OA interest rate is currently 2.5% p.a. 3.4% is obviously higher than 2.5%.

Does this mean that you should withdraw your OA funds straightaway and put them with OCBC?

As a kiasu Singaporean, I quickly went to down to an OCBC branch to find out how the fixed deposit for CPF fund works. 

Here’s what I found out so you don’t have to queue like I did to decide! 

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Source: Business Times

How does the OCBC fixed deposit for CPF ordinary account savings work?

This works in the same fashion as any other fixed deposits, except that the money is coming from your CPF OA instead of cash.

You will have to visit the branch and apply (happy waiting). You cannot do it through iBanking.

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The usual application fees and early withdrawal penalties apply.

The minimum sum to put into this FD is S$20,000, bearing in mind that you will need to have another minimum sum of S$20,000 in your OA. 

If you currently have less than S$40,000 in your OA, you are not eligible to apply for this product. 

At the end of 12 months, your principal and interest will be credited to the CPF Investment Account (CPF IA), and you will need to transfer the money back to CPF OA before you can start to accrue interest in your CPF OA account again.

Source: OCBC

Is is worthwhile to use CPF funds for OCBC fixed deposit?

If you are familiar with using CPF OA funds to buy T-Bills Singapore, you will know that you will lose interest earned on your CPF OA whenever the funds leave the account. 

To reiterate, the CPF balances used for interest computation are affected by the transactions in your account. 

Withdrawals/deductions in this month will not earn interest from this month onwards. Contributions (including refunds) received this month start earning interest next month. 

In essence, the CPF interest payment is computed based on the lowest balance for the month, rather than the month’s average balance. 

Let me show you what this means in a simplified manner.

Date of application/deduction of money from CPF OADate which money is credited into CPF IADate which money is transferred back into CPF OA (assuming 2 weeks)Number of months in which you do not earn interest in your CPF OA
1 Dec 20221 Dec 202315 Dec 2023 13
20 Dec 202220 Dec 20234 Jan 202414


Depending on your application date and how fast the money is transferred back to your CPF OA, you might face a situation where you lose 14 months’ worth of interest, instead of 13. 

Hence, this 3.4% may seem less attractive now.

Assuming you put S$20,000 as Fixed Deposit

Date of application/deduction of money from CPF OAInterest rate earned from 12 month time deposit at 3.4% p.a.Interest loss from CPF OA Net Gain
1 Dec 2022$680$542$138
20 Dec 2022$680$583$97

My thoughts after a one-hour wait to find out how to put my CPF OA funds into OCBC fixed deposit

Yes, you will have a slight gain if you were to put your CPF OA funds into OCBC fixed deposit

Take note that there might be a transaction fee of about $10, so your net gain might be lower than the illustrative example presented above.

While 3.4% may seem significantly higher than 2.5%, the additional sum of money you get is not significantly higher unless you put in more money.

For the effort I need to put in, I am not a fan of put my CPF OA funds into OCBC fixed deposit to earn the 3.4% interest. 

Some in the community have expressed that we will be better off putting the money in T-Bills.  To find out if it makes sense to put your CPF OA funds into T-bills, check out Beansprout's article on investing in the T-bill using CPF. 

There'll also be a free webinar on T-bills on 22 November if you have burning questions to ask.

Join Beansprout's Telegram group now and stay updated with the latest financial lobangs and expert insights! 

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