How to calculate monthly average balance?

There are so many people asking on Beansprout Telegram channel on how to calculate monthly average balance recently, I suspect because interest rates are coming down, and people decided to take advantage of new account opening promotion to get better interest out of their money sitting in the bank.

Of course, the balance is easy to calculate if it's the same throughout the month with not much fluctuation but there are some edge cases to deal with (example like public holiday / sunday).

Hopefully this article will help answer that so that you can know how much to keep in the bank to achieve the balance you need, either to hit the desired balance to maximize interest or to hit some promotional bonus.

Cut Off Timing

Do note that OCBC has a cut off timing around 9.45pm. Meaning to say, any incoming funds at 10.30pm, are reflected in your account, but doesn't take into the calculation of the interest. UOB has a cut off timing around 10.45pm. Based on experience, this is reliable most of the time but sometimes it may be later. I personally encountered cut off around 11.30pm. This will affect the average daily balance in your account.

Sunday or Public Holiday

When transfers are made during Sunday or Public Holiday, although the recipient receives the funds immediately (I'm assuming you transfer via FAST), the calculation of interest are not counted from the day you transfer. Most banks use the term value date. eg. If you made a transfer on Sunday, the value date is Monday. So the end of day balance so Sunday is using the balance before cut-off time on Saturday. Same logic applies for Public Holiday.

What if Monday is a public holiday? In that scenario, if you transfer your funds into OCBC after the cut off timing on Saturday night, since there is no calculation on Sunday or Public Holiday, the calculation of interest only happens Tuesday onwards.

How to check crediting (value date)

For UOB, you can see the value date using the mobile app. As for OCBC, you can only see the value date using desktop. It's not shown on mobile app (at point of writing this article).

Common mistakes

I see a few people missing out the "Save Bonus" for OCBC because first of the month falls on Sunday. The most recent one is 1 December 2024. So what happens when you transfer $500 on 1 December 2024 to OCBC, that amount is only calculated on 2 December 2024 onwards. Assuming your monthly average balance in November 2024 is $100,000, you need a monthly average balance of $100,500 in December 2024 to qualify for the save bonus. You might be thinking since I transfer $500 on 1 December 2024, it should work but in reality it won't.

You can see on day 31, the average daily balance is only $100,483.87.

How to use the monthly average balance tool

The calculator has some defaults.

1. Starting balance are set at $100,000
2. There's an input to let you set initial balance, that balance will be stored locally on your browser so that when you refresh them, it keeps that. Of course when you change that initial balance, the latest changes will be stored.
3. The day starts from 1 to 31 every single time you refresh the page. However I understand there are people who open a new account mid-way, so on the first row, there's a "Remove" button that lets you remove accordingly.
4. Not all months have 31 days so towards the end of the table, there is a remove last day button that lets you remove excess days accordingly.
5. The reset button is just a button to refresh the page, placed there for convenience but no extra functionality.

Conclusion

Hope you find the calculator tool useful.