From 1st October 2020, OCBC Cashflo Credit Card will now impose a 1% processing fee for Great Eastern premiums charged under a 12-month installment plan. If you are using your Cashflo Credit Card to pay for your Great Eastern premiums, this is something that you will want to take note of.
OCBC Cashflo Credit Card Pre-October 2020
To be honest, the OCBC Cashflo credit card has great advantage for Great Eastern policy holders. To summarize, these are the 3 greatest advantage they offer.
- Allow the policy owners to be charged annually to get cheaper premiums. (to be explained below)
- Allow policy holder to better manage their cashflow / wealth management. (as they will be paying monthly)
- Get cash rebates (0.3% cash rebate on your premiums for selected Great Eastern Life and Great Eastern General insurance plans)
To set the context, paying annual premiums for (non-ILP) insurance policy typically gives around 3% discount. Imagine this, the annual premiums for the policy is $12,000. The same insurance policy will cost $1030/month ($12,360/annually) if you decide to pay by monthly mode.
The client saves $360/year by being charged annually using the Cashflo Card. He is able to pay monthly $1000 to manage his cashflow better and get $3/month cash rebate (assuming that the card is only used for this policy.)
Net Benefit: $396 per year ($360 + $36)
OCBC Cashflo Credit Card Post-October 2020
From 1st October 2020, there will now be a 1% processing fee if the policy holder decides to take the option to be charged annually AND cash rebates will no longer be awarded for Great Eastern premiums.
What should you do?
Let’s take the above situation again where the policy holder is paying $12,000 annually.
The client saves $360/year by being charged annually using the Cashflo Card. Customer wants to have it via installment and have to pay $120/year for the processing fee. There is no longer any cash rebates.
Net Benefit: $240 per year ($360 – $120)
There is still net saving if you use this method of paying for the premiums.
It is no fun having your net benefits being slashed especially if you have been reaping the benefits from this for years. However, this is not the first time that credit card’s benefit is being updated to reflect the current market situation.
I believe that this will happen in future as well. Do keep yourself updated on these changes.
Speak to your financial advisors for future clarification.
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