Thursday, December 20, 2007

Enjoy "extended" contra

Most investors know that they have to pay their stocks settlement within T+3 to T+5 depending on brokerage house. There is way in which you are able to enjoy an "extended" period of settlement. All you need is a DBS internet banking and DBS credit card. The idea is to make use of your credit limit balance from credit card to pay for your stocks settlement without incurring any CHARGES. Below is the step required to make payment for your settlement for example with POEMS account:
  1. Log on to DBS internet banking
  2. Select Payment Services > Bill Payment
  3. Choose Phillip Securities for stock purchases
  4. Click Submit button
  5. Under Pay From, choose a credit card
  6. Enter amount of settlement required
  7. Under consumer reference number, enter your 9 or 10 characters reference as provided by POEMS
  8. Choose immediate payment to ensure settlement is reached within T+3 to T+5
  9. Click Submit button
You need to ensure that you have sufficient credit limit balance before doing the payment or else the transaction won't be processed. Check with POEMS for your 9 or 10 characters reference. Anyway even if you get the reference wrong, the transaction is void and your credit limit will be restored within the next 2 working days.

Now here is the other beauty, even though you don't have any settlement to do, you can still transfer your credit limit balance to POEMS to earn some interest as the money is invested in money market fund. But this is provided you have chosen the cash management account with POEMS. Depending on the amount of credit limit that you have, the interest can be quite substantial. So near to the due date of your credit card bill settlement, all you need to do is transfer back the money from POEMS to DBS.

After reading this you can then enjoy a maximum of 20 to 25 days "extended" contra or 20 to 25 days interest on your credit limit balance. The number of days will depend from the date your credit limit is restored to the due date of your credit card bill. However it is important to take note of the risks involved before executing the above method of payment. Any late payment of your credit card bill can result in high interest charges. So do not take things for granted.


Eddie said...

any payment by Credit card, constitutes as Cash Advance.

Once you click on the submit button, DBS credit card will start charging you 24% p.a. Interest immediately.

I think you are mistaken, check your credit card terms and conditions. It is also stated explicitly on the DBS internet banking page.

Mike Dirnt said...

well its up to you to believe it or not. Have been there and done that successfully :)

Anonymous said...

Hey thanks for sharing this cool tip with us! I've asked dbs about it and they confirmed that there will not be additional charges, as you said. Of course, if anyone is still unsure, it'd be best to call dbs personally to verify :)

Mike Dirnt said...

Yes im glad that you did. As far as i know, only DBS allows bill payment to Securities. So use it at your own risk and dont get caught for late payment :)

Anonymous said...

muz call poems to get the 9 or 10 characters reference?

Mike Dirnt said...

1) easiest method is to call poems
2) usually it is in the format 20XXYYYYYY where XX is the broker intial and YYYYYY is your login account number without the first digit 0

anyway if you got it wrong, the money will be transferred back to your credit card. just check poems to be sure

Anonymous said...

I see, can I ask them deposit cheque directly to the credit card account before due instead of direct credit back to me?

Mike Dirnt said...

few days before credit card due, just withdraw from your POEMS account to DBS. if your credit card payment is on giro, it will be convenient as the money will be automatically deducted from DBS

Anonymous said...

Thanks , very appreciated.

Anonymous said...

Is this method apply to DBS credit card only? Can use the same method of Citibank and other banks?

Mike Dirnt said...

citibank, ocbc, uob i checked can't :(

if you can find other banks, do tell me.

Anonymous said...

thanks for sharing

Verbatin said...

Hi Mike Dirnt,

thanks for sharing this cool tips

I can now start using my DBS/POSB everyday card to pay for my stock purchases.

i will then pay my DBS card bills via AXS. I holds the Standchart Xtra saver debit card and it will give me 0.5% cashback.

The cashback of 0.5% is even higher than the brokerage fee incurred(around 0.27%)

Many thanks once again!

Mike Dirnt said...

Verbatin yes thank you for highlighting to me on the extrasaver benefits. you can effectively pay no brokerage charges. :) i shall make a post on that one to share with everyone

Anonymous said...

Hi, just want to check do you get the 0.3% rebate if you pay by POSB Everyday credit Card?

Mike Dirnt said...

No you don't earn any rewards or rebates.

ku said...

You can also pay your Citibank Ready Credit (CRC) Bill by using your XtraSaver card at AXS stations using NETS. Then immediately transfer your credit balance from CRC account back to your Stanchart account. In this way, you get back your cash immediately and also receive the 0.5% NETS cashback!! No need to remember to pay back your DBS CC bill in this way. For me, I also own a Citibank Step-up Account which is now at 2% interest, even better than Stanchart's e$aver. So for me, I simply online transfer from my CRC to my Step-up account within the same day, and this is even better than the above approach because you don't lose 2 days of interest as in performing an online fund transfer between 2 bank accounts.

Mike Dirnt said...

Hi Ku,

Thank you for sharing. Im interested on the 2nd method. Now my question is how much interest you need to pay for withdrawing from CRC?

ku said...

Hi Mike,
You don't incur any interest on transferring between the CRC and Step-up account, though there is an annual fee of $60 for the CRC account, which I believe you can have it waived simply by calling up Citibank. At first I signed up for CRC not to have this 0.5% NETS cashback from XTraSaver but to enjoy the $150 per month in brokerage commission rebates. However I signed up late, and only got to enjoy the rebate in December last year (promotion usually runs from Aug to Dec each year).

Mike Dirnt said...

Thanks Ku. I will sign up CRC straight away :) I will check more with Citi officers. I always thought you need to pay interest for using ready credit or credit lines.

Its great to hear many "goodies" from all sorts of people. Keep it coming guys!

Mike Dirnt said...

Ku, sure why are you saying there is no interest charged? i check with citi, the moment you transfer you will incur 17% pa. actually it makes sense because how can it be interest free to use credit line or ready credit.

ku said...

Hi Mike,
Allow me to clarify. You incur interest on CRC only when you draw money from it and have debit balance. For me, I have "credit" balance instead of "debit" by crediting the CRC acct with my XtraSaver card.
BTW, I haven't tried this but I think actually you don't need to use CRC account to get the 0.5% cashback from XtraSaver. You may pay your Step-Up by XtraSaver's NETS function directly at AXS stations, however, this is capped at $2k per day. So if you will need 5 days to transfer 10k, compared to $5k per day if paying to CRC, which takes only 2 days to transfer 10k, and receive the maximum rebate of $50 from XtraSaver.
Hope this clarifies. :)

Mike Dirnt said...

lol ku thank you for the trouble explaining. now i know what you mean. in short you pay interest only for the debited amount. :)

wow now i need more $$$ to put more credits :) let me just open the Xtrasaver card. Happy New Year to all!

ku said...

No worries Mike, it's good to share such information and wish everyone have a wonderful Rat year ahead! Huat ah!

Verbatin said...


thansk for the tips
I hold a Xtra saver account. I thought Nets transfer for Xtra saver is 5k a day. not 2k a day.

So can I just pay money into my DBS cashline and then transfer back to earn the $50 cashback?

can you elaborate further how to enjoy this $150 brokerage rebates from citi ready credit?


ku said...

Hi Verbatin,
$2k per day transfer limit is set by Citibank when you perform fund transfer to Citibank savings account (e.g. Step-Up acct) via NETS at AXS stations. For Citibank Ready Credit, the daily transfer limit is $5k, which is set by Stanchart's XtraSaver.
I do not own DBS Cashline but I guess you may perform the same trick as I did using CRC.

The brokerage waiver is a tricky one to get as you need to have average debit balance of $1000 per day for the whole calendar month. To do this I would advise you use an Excel worksheet to keep track of your daily balance in the CRC account starting from day 1 of the month and make sure it totals up to $-30000 for the whole month, which = $-1000 per day, assuming 30 days in that month. The brokerage waiver promotion is just over in last Decemeber, but I believe it will start again this coming August.
Example, day 1=10000, day 2=5000, day3=day4=day5=day6=-10000,day7=-5000,day8=...=day30=0.
Total = -30000,average = -1000. You will enjoy the waiver of brokerage up to max of $150. But note Citibank will also deduct an interest of about $22 (interest of 17.95% p.a.) due to the debit balance you have maintained. In above example, you would write a CRC cheque of $10000 on day 3 to say UOBKH, to incur a debit balance of -10000 for 4 days, then pay back the CRC bill from day 7 & day8 with $5000 each using XtraSaver.
As you can see, the calculation is kinda complicated. You may think it's not really worth the effort to just get the $150-$22=$128 amount of "waiver".

ku said...

Sorry that I forgot to note that in the above example, Citibank will only credit back $10000*0.275%=$27.5, so you need to issue more cheques to make it hit the cap of $150. What I did was to online transfer about $50k to CRC account from my Step-Up account EXACTLY ON the day where UOBKH is clearing my CRC cheque of $50k. (Thus having this amount of money in your other Citibank account e.g. Step-Up will come in handy.) This will avoid having too much of credit balance that would affect the final debit of -30000 at the end of the month.

Mike Dirnt said...

wow ku, its so troublesome to enjoy $150 worth of brokerage rebates. lol

ku said...

Haha mike,
You may say I am a financial buff who enjoys squeezing every bit of the bank... kekeke Thus I don't mind the hassle of calculating and monitoring the dollars and cents. Citibank purposely makes it so troublesome to get the $150 not without their reasons, and they would think very few freaks like me exist who go all out just to get this "tiny" sum.

Mike Dirnt said...

Hi Ku and Verbatin,

I have setup a chatbox in the home page. We can make use of the chatbox instead of replying here. I think it is easier. But there is a pop up due to the chatbox which is not free :(

Verbatin said...


Ya troublesome to enjoy the $150 rebates.

I think it is easier to "earn" from the bank by transferring money to my cashline account via AXS so that my Cashline becomes a "credit balance".

For a start i shall transfer $1,000via AXS and immediately transfer the same sum back to my Xtra Saver. (Not sure the transfer has to go through POSB and then to Xtra Saver or not or can directly transfer from Cashline to Xtra Saver?)

shall See whether can enjoy cashback or not

seem like having 2 Xtra saver account not enough (since Cashback is cap at $5o a mth)LOL...

gotta ask my dad to open another one....:p

Roy said...

Hi Verbatin,

if we were to have example 5 account of Xtra saver and hog the axs machine by transfering between the 5 Xtra saver account and the cash line account all within one day.

Will this not earn us 5 x $50 = 250?

Verbatin said...


i think it's possible to earn $250 that way. but u hv to maintain a weighted balance 6k fper mth or 5 account.

and i am not sure whether one operson can open 5 accounts or not?

Roy said...

Just have a check with SCB. you can only open 1 account under your own name but can open multiple joint account. I guess it time to find all the brother and sisters to gang up.

also i have done a check with the axs machine. These are the few bank that is link up to it

1. Abn
2. Citibank
3. DBS
4. Diners Club
5. Hsbc
6. Maybank
7. Posb
8. Uob
9. SCB

What i also heard is that Hsbc allow you to buy unit trust from dollex. if dollex have money market fund as well then we will be able to get out credit limit to earn interest too.

but then bacause of work commitmment i am not able to call hsbc and dollex to comfirm.

can anyone continue the Financial CSI leg work?

Mike Dirnt said...

frankly speaking, i got a feeling that earning SCB rebates through this nets transfer wont last long. but use this opportunity while it still lasts :)

you can make many joint accounts provided you have huge capital to maintain the 6k. i wish i have.

as for the hsbc, can you use your credit to pay for funds? as far as i know only DBS allows. i dont have hsbc CC.

ku said...

Yeah, if more and more people are exploiting this trick, SCB is bound to take notice and scrap the NETS rebate altogether. I would suggest that we keep a low profile on this... :P

Mike Dirnt said...

ku i guess its ok to share these stuffs. i dont think my blog can create a big wave. :)

anyway i already sign up for the Xtrasaver not solely for this transfer thingy. i want to earn rebates from the nets transaction because in the past i have been using nets with posb.

Verbatin said...

at forum, i read that xtra saver used to be able to pay for unit trust bought from dollarex.

the bank/dollar ex disallowed when they realised many investors exploited the loopholes to get rebates (not sure the detail though)

Erwin Liong said...

Regarding your entry on the extended contra, I called DBS up and asked them about using cc to pay for POEMS. They say that as long as there is not signature-based transaction OR no entry of cc info entry at the purchase side (POEMS), it will be used as a cash advance or cashline.

Has the rule changed lately? Anyone re-verified with DBS again?

Anonymous said...

how can i transfer funds from Xtra saver to Step up account from AXS?
I was at AXS and noted there is CRC payment but payment to citi step up account?

Anonymous said...

pls ignore the above msg. there is a typo!

how can i transfer funds from Xtra saver to Step up account from AXS?
I was at AXS and noted there is CRC payment but NO payment to citi step up account?

ku said...

Folks, for your info, Citibank CRC brokerage waiver promotion is here again! It will run from 1 March to 31 May 08. Three months only.

vickers said...

Hi Mike !!

Good thinking there (abt the extended contra) !!!

Problem is: Any funds transfer using your credit card to another account (vickers, peoms, fund super mart etc) is considered as CASH ADVANCE.

DBS iBanking takes convenience to a whole new level. You can now transfer funds from your credit card to ...... or an inter-bank account

The bottom line is bill payment (using credit card) to any organization/company would not be considered as cash advances but bill payment (using credit card) to other accounts wld be considered as cash advance.

At the same time, I have consulted several credit card officers and they have confirmed with me that there is cash advance fees if you pay your bills to vickers using credits card !!!

Mike Dirnt said...

why is there fees when you pay to vickers? my last transfer to poems on 8 Feb did not incur any fees.

i just paid my bill statement for month of feb. i will do the same thing for month of mar and will update if there is any fees. i dont mind taking the risk as i dont think there is any difference.

Mike Dirnt said...

verbatin it has been a long time i last visited sgfunds since the holiday. i have a lot of news to catch up and update.

Mike Dirnt said...

ku thanks for the update.

anonymous i will update the step when i do the transfer soon from Xtrasaver to step up account. maybe next week

Verbatin said...

quote : The bottom line is bill payment (using credit card) to any organization/company would not be considered as cash advances but bill payment (using credit card) to other accounts wld be considered as cash advance.

I think brokerage company like DMG, philip securities etc are linked with DBS online. they are thus considered as "payment to billing organisation" (billing organisation) and hence using your credit card to pay to DMG, philips securuities etc are NOT considered as cash advance.

Anonymous said...

Does this work form Lim & Tan when you use HSBC as well?

Mike Dirnt said...

it can work with Lim & Tan from DBS. but using hsbc? i dont think so. just a apply for a dbs card

dao said...

Does it work if i use Electronic Payment for Shares (EPS) to make payment using my DBS Credit Card? Does it work for all broking houses such as OCBC securities, etc. What reference number should we use? If EPS works, don't need any reference number.

Mike Dirnt said...

No it does not work for EPS. just follow the steps i mentioned.

read my the other posts on list of trading houses that accept this payment

Sam said...

Ok I am going to try this soon. Just converted by Phillips to a cash management account. I've never done this before so not sure about the steps. Do I need to execute any buy order of the money market fund in POEMS? Or I just follow the steps in DBS internet banking.

And how to transfer the money back from POEMS just before the DBS credit card due date?

Mike Dirnt said...

1) check with poems your account number
2) do the transfer after you settle your bill. so that you have the maximum credit
3) dont need to buy. just follow the steps i mentioned if you already have cash management account
4) go to online form to withdraw. just like you withdraw your money when you sell stock. have you trade before?
5) you can withdraw 1 day before due date. for example, due date is on working day of 3 Jun. You can withdraw on 2 Jun before 10am. or to play safe, you withdraw 2 or 3 days before.

Sam said...

Hi Mike, yes I've traded before but previously mine was not a cash management account so the money was automatically credited back to my DBS account a few days after selling. I will follow your instructions, thanks!

Sam said...

Ok I've managed to make the transfer, will monitor to see if there are any cash advance fees or if it is taken as a normal credit card transaction.

Just wondering, does this mean that we can also use credit card to pay bills of any of the listed corporations? I looked through the list and besides brokerages it also includes town councils, insurance companies, IRAS, telcos, educational institutions, clubs & societies too! For payments to brokerages there are no reward points given but how about the rest?

Is DBS the only bank that allows bill payment using credit cards? How come only DBS has this special facility and not the rest?

Mike Dirnt said...

yes you make use to pay other organisations as well but i havent done that. if im not wrong no points or rewards given for bill payments.

the other banks also have bill payments but its been a long time that they removed the payment to trading accounts. :)

till now only DBS/POSB can do that. so use it at your own peril. dont get charged for late payment

Anonymous said...

This is neat!

Does paying to CRC from XSaver or other cashline earn rebate?

Is the $3000 daily NETS payment limit or per transaction limit?

Mike Dirnt said...

yes you can still earn rebates :)

per transaction limit is $2000

Anonymous said...

This is an interesting post. It is almost 9 months old.

Is it still a workable strategy to use? I would like to use it to buy shares to take advantage of the extended contra period. To give my money more 'mileage'.

What i am concern is if there is any additional charges involved especially if this is considered cash advance from credit card.

anybody to confirm?

Anonymous said...

Hi Mike,

Would it be possible to do a quick review on this again. Can we still make use of what you share here.

Also with the new AXA machine, mine only take POSB/DBS and Citibank... not longer accept UOB etc..