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What is Dr. Hamidah Binti Abd Karim and Yap Kok Pew has both in common?

They are both the lucky winner for the deposit contest; Dr. Hamidah is the RM100,000 grand prize winner of CIMB’s Cash Venture contest while Mr. Yap won the 1kg gold bar from Am Bank’s Mad Gold Rush contest.

One thing for sure, banks believed they are many Yap & Dr. Hamidah alike out that. It was reported that Am Bank’s Mad Gold Rush attracted RM300 million deposits. This probably explains why deposit contest is the hottest thing now; especially for banks that want to expand their lending business (banks need money to lend money) and to meet BNM’s regulation. For a consumer, the main question to ask is - to what extend does these deposit contests encourage good saving behavior or they simply just a short-term deposit account opening-closing and deposit transferring exercise?

More Deposit Contest
But if you missed out those cash and gold, need not be despaired. This time around, there are cash, more cash, and yes dazzling diamond too! Here is a quick look of the various deposit contests currently being offered:

Affin Bank: Quarter Million Deal. From 1 Apr to 30 Sept
Total number of prizes: 31
Total prize money: RM125,000
Monthly prizes: Yes

Eon Bank: Cash Surprise. From 3 May to 31 Jan ‘07
Total number of prizes: 23
Total prize money: RM1,350,000
Monthly prizes: No

RHB Bank: Cash Your Dreams. 3 rounds:1 Apr-30 Jun; 1 Jul - 31 Sept; 1 Oct-31 Dec
Total prizes: 162 (54 prizes in each round) including monthly prizes
Total prize money: RM836,838
Monthly prizes: Yes

Public Bank: PB Diamond Dazzle You. From 1 May to 31 Dec
Total number of prizes: 288
Total prize money: RM665,900 (worth of diamond)
Monthly prizes: Yes

Deposit Contest Basic
Taking part of the contest is easy, it is basically a lucky draw. The contest opens to existing and new account holders, Islamic and conventional banking, individual and business. To enter, you only need to deposit the required minimum amount. After that, you need to execute a small instruction and whollah - you are in! But to take part throughout out the contest as most of these contests run several of months and come with monthly prizes, you need to either ‘top up’ or ‘lock-in’ your cash money with the banks.

• Top-up - Incremental Monthly Average Balance

Under the ‘top-up’ scheme, participants are required to add an additional minimum deposit throughout the contest period. In short, participants have to grow their deposit balance. For example, participants on Eon Bank’ Cash Surprise have to deposit a minimum RM500 every month where each additional top-up is given one contest entry form. The more top-ups, the more chances of winning the prizes. The standard term used by the bank is “Incremental monthly average balance or IMAB in short.

• Lock-up - Maintain Monthly Average Balance

Essentially, the lock-up is best treated as kind of fixed deposit where participants must maintain a fixed average monthly account balance to be eligible for the contest. The lock in period starts from 3 months onward. Both RHB’s Cash Your Dream and PB Bank’s Diamond Dazzle contest is based on this mechanism.

Top-up vs Lock-in

• Top-up contest is much more easy to enter because the initial deposit required is usually much lower than the lock-in. For Example, Eon & Affin Bank initial deposit is RM500 & RM2,000 respectively as compared to lock-in base’s PB & RHB of RM3,000 & RM5,000.

• Top-up contests required a steady stream of cash flow thus could have a positive impact on saving regularly. Take Eon Bank for example, if you take part every month, you would end up saving RM4,500 over a period of 9 months (provided these are ‘new’ money). On the other hand, lock-in suites those already have a good saving base whom are looking for a possible higher ‘returns.’

• Top-up contest could be difficult to monitor. The IMAB calculation is not a straightforward formula as it depends on the date the deposit is made and the total days in a given month

Stay tune for Part II : Deposit Contest Comparison: Cash vs Diamond and more