Full-time national servicemen, or NSFs, can now enjoy an interest rate of 2 per cent per annum under a new POSB scheme.
To do so, they have to allocate a portion of their monthly salary to a POSB Save-As-You-Earn (SAYE) account. The amount they can allocate is between $50 and $3,000 a month.
The POSB Save-As-You-Serve scheme was launched yesterday to recognise the contributions of national servicemen.
Newly enlisted NSFs and those currently serving can transfer money from their salaries into this account every month and earn interest for 24 months.
After 24 months, the amount in the account will take on the ordinary savings account interest rate.
Under this scheme, an NSF who transfers $100 a month into his POSB SAYE account will have $2,451.80 at the end of two years, compared with $2,401.25 if he had left it in his ordinary savings account. The 2 per cent interest rate is higher than the base rates of DBS Bank and POSB savings accounts, and that of the OCBC 360 account, a deposit account, which are 0.05 per cent per annum.
The "very high" interest rate is to encourage NSFs to start saving and learn the value of thrift, said Mr Jeremy Soo, managing director and head of consumer banking at DBS.
Lance Corporal Darryl Chia, 19, said the 2 per cent interest rate is attractive.
"Usually (for) interest rates in Singapore and overseas, a pretty decent interest rate is about 1.1 per cent or 1.2 per cent. Very rarely does it go to 2 per cent and above," said Lance Cpl Chia, a provost in the Singapore Civil Defence Force.
Another perk for NSFs and operationally ready national servicemen (NSmen) is a 2 per cent rebate on local contactless payments made on their HomeTeamNS-PAssion-POSB debit card or Safra DBS debit card.
The minimum sum NSmen must spend a month with the card is $400, but there is no minimum spending requirement for NSFs. The rebate NSFs can earn a month is capped at $50.
Mr Desmond Lee, Senior Minister of State for Home Affairs and National Development, said he hopes more partners will come on board to introduce other innovative programmes to recognise the contributions of NSFs and NSmen.