Anyone looking to take charge of their finances knows that they have to build a good sized savings account. Living paycheck to paycheck is difficult, and the situation can easily move from bad to worse should a sudden change occur in their finances such as loss of a job, if their car breaks down, or a family member falls sick. People save for a variety of reasons, and as they save, they look to ensure that their money continues to grow by earning a good amount in interest. Some of the reasons people save include the following:
- Create an emergency fund – It is prudent to build an emergency fund that holds an equivalent of the amount of money that one’s household uses up in 3 to 6 months. This can cushion the saver in the event of an emergency or a job loss. Finding a good savings account to put this money is key.
- Saving money to put down on a house – Purchasing a home is one of the biggest investments that most people will ever make. A down payment on a house in Singapore usually starts at 10% of the value of the home. It is important that one save up this money if they are planning to purchase a home in the future. It is even better when these savings can earn a good rate of interest as one continues to save.
- Saving for a holiday or for a luxury item – Even though personal loans can pay for such things, financial advisers encourage people to save for the same and leave personal loans for emergencies and tougher times. Saving up for a vacation means that one can enjoy the vacation without having to worry about going into debt for the next 1 or more years for that. It should become a habit to save for fun things and luxury items, and ensuring that one is saving in a high interest account provides even more motivation.
- There are many other reasons to save, including saving up for further education, to purchase a car, and more.
Upward mobile adults in Singapore, especially those who are conscious of the need to save up their money, are always looking for the best place to do just that. It is not enough to have a safe place to save one’s money; the money should also earn interest so that their savings can keep growing. With the various banks in Singapore looking to attract people with extra cash to save, banking options are many. Here is a quick rundown of great savings account options to choose from:
1. DBS: Multiplier Account
This account can earn one as much as 3.5% interest per annum. The interest rate given every month is based on the following two factors:
- How many eligible transactions you carry out that month
- The number of eligible categories that you transact in per month
If, for example, one credits a salary of S$2000 and then spends about S$400 on the credit card that he has with DBS, the interest rate earned per annum will be 1.55% pa. Should the person then take insurance of $100 every month, then the interest earned goes up to 2% pa.
Bonus interest is doled out based on how many eligible transactions one completes every month. In order to get the bonus interest, one must first credit their salary into the account. There is no minimum amount for this. Further, one must meet one of their other requirements. The other requirements include:
- Credit card use with them
- Investments
- Making a home loan instalment
- Insurance
Whereas other savings accounts carry minimum requirements on salary amounts and credit card spending, this one does not. It is therefore ideal for those who are not able to meet the said requirements.
2. Standard Chartered Bank: Bonus Saver Account
With this account, one has the chance to earn as much as 3.88% pa in interest. This account offers a particular interest rate as a base, and then using various transactions, one is able to add on so that he or she can take advantage of the bonus interest. Luckily, one does not need to put in an initial deposit to get started. However, one needs to keep a minimum balance of S$3000 every month. To earn bonus interest, the following should be done:
- Everyone starts with a 0.1% pa base interest rate
- Bonus interest is earned by doing the following:
- Crediting a minimum salary of S$3000 per month gives an additional 1%
- Credit spend of S$500 earns 0.78% whereas spending S$2000 earns 1.78%
- If one pays 3 bills each with a minimum of S$50, they earn an additional 0.25%.
- If one insures or invests through Standard Chartered, they earn an additional 0.75%.
The following combinations can earn interest at these rates:
- If one only credits their salary, they get 1.1%.
- If they credit their salary and spend S$500 on their credit card, they earn 1.88%.
- Should they credit their salary, spend S$500 on their credit card and pay S$150 in bills, they go up to 2.13%.
- If they combine all their transactions, they can earn a whopping 3.88%. In Singapore, this is the highest EIR currently.
Bonus interest is capped at S$100,000.
- This salary is ideal for someone earning over S$3000
- Someone who spends S$150 on bills and S$500 on their credit card regularly
- And one who has a plan to save upwards of S$50,000 in the long run
3. Bank of China: SmartSaver Account
This account works well for people who earn much and spend much. On average, one can hope to earn about 1.95% pa. However, those on the high end can expect 3.15%. This is what one can expect:
- Salary credit should be at a minimum of S$2000. At this rate, one can expect to earn 0.8%. If one is crediting a salary upwards of S$6000, the rate goes up to 1.2% pa.
- The minimum credit spend to earn bonus interest is S$500. This offers an additional 0.8%. If one spends S$1500 and above, then he or she is able to earn an additional 1.6%.
- If one transacts 3 bill payments or pays off their mortgage for that month, then an additional 0.35% pa is accrued.
To earn the full 3.15%, one would have to deposit a monthly salary above S$6000, and have a credit spend of at the very least S$1500. By combining all the transactions, one is able to max out at 3.55% pa. Bonus interest is capped at S$60,000.
An average earner who spends conservatively will not be able to earn in the higher percentages with this account. It is ideal for a high income earner, S$6000 and above, who also spends a lot of money – as much as S$1500 on credit cards every month.
4. UOB: One Account
This account is known as the major competitor for the OCBC 360 account, the one account can give one a maximum of 3.88% pa. However, it is important to note that one can only get this interest rate if they have savings of S$75,000. Anything below S$75,000 accrues a lower interest rate.
This account works best for someone who has over S$30,000 in the bank and can continue to grow their savings and combine this with other transactions to get to the full 3.88% pa interest rate. The other transactions that can be combined with this to max out on the interest rate include:
- Credit spend of S$500
- Credit one’s salary
- Payment of 3 bills
If one credits their salary to the bank and additionally spends a minimum of S$500 or carries out three GIRO debit transactions, they can earn the following interest rates per annum if they have saved the following amounts:
- S$15000 – 1.85%
- S$30000 – 2.00%
- S$45000 – 2.15%
- S$60000 – 2.30%
- S$75000 – 3.88%
5. OCBC: 360 Account
This account also pays two types of interest, base interest and bonus interest. Base interest accrues on a daily basis and is compiled at the end of the month. Bonus interest is earned based on how much one has saved and carrying out specific monthly transactions. The transactions that can earn one interest include the following:
- Crediting one’s salary
- Paying ones bills
- Credit card spend
- Investments
- Savings
Interest calculations:
Interest is calculated as follows:
- Minimum salary credited should be S$2000 and it earns one an interest of 1.2%.
- Paying 3 bills with a total of S$150 to earn 0.3% pa
- A credit card spend of S$500 earns you 0.3%.
- Purchasing eligible insurance for 12 months consecutively earns one 0.6%.
- Purchasing eligible investments for 12 months consecutively earns one 1.2%.
- If one maintains a daily average balance of S$200,000 and higher, he or she can accrue an additional 1% pa interest.
An initial S$1000 is required to open the account and the bonus interest is capped at S$70,000. This account works well for people who are earning a salary of S$2000 and above as well as people who are looking to invest and insure through OCBC.
6. Maybank: Save Up Programme
This account promises as much as 3% pa in interest. The saver is expected to put in an initial S$500 deposit and maintain a monthly balance of S$1000 and above. The base interest starts at 0.1875% for the initial S$3000, and then goes up to 0.25% for the next S$47,000. The bonus interest is then dependent on the following:
- Bill payments of S$300
- Credit card spend of S$500
- Take an education loan of a minimum S$10,000
- Credit a salary of at least S$2000
- Home loan with a minimum of S$200,000
- Hire purchase financing of a minimum S$35,000
- Invest in a unit trust at S$300 every month, or a minimum figure of S$30,000
- Insurance carrying a minimum annual premium of S$5,000
- Renovation loan with a minimum of S$10,000
If one carries out 2 of the transactions above, the interest rates earned are 1.05%. If he or she carries out 3 of the above transactions, they become eligible for the full 3%. The bonus interest is capped at $60,000.
This account works well for people who are not earning very high incomes and are going to take some loan products offered by Maybank.
7. CIMB: FastSaver Account
This account earns a basic interest rate of 1% p.a. for the initial S$50,000. An initial deposit of S$1000 is required, but there is no minimum balance requirement. This makes this an ideal account for someone with a lot of money saved up, looking for a place to stash it where they can still earn high basic interest without having to jump the usual hoops. The CIMB FastSaver account serves this purpose and has the particular advantage of not locking your finances in as is the case with fixed deposit accounts.
This account does not give a bonus interest rate; it has a basic standard rate of 1% p.a. It works best for people who do not want to jump hoops in order to get a great interest rate. It is also convenient because if offers online banking. It also works well for people who have a lump sum of money that they do not want to put in a locked savings account like a fixed deposit account.
With such great options, it may be a great idea to know what one should be thinking about when carrying out these comparisons. Here are some guidelines that can help:
- Consider the minimum deposit – Looking through the accounts above, it is important to take note of the initial deposit and confirm that the saver has the amount needed. That way, one knows which account they qualify for. It is also important to take note of minimum balances and ask about penalties should one fall below the minimum.
- Consider the various requirements to earn a bonus interest – This is particularly important if the base interest rate is very low. If one is not able to meet the other requirements, it may be better to go with an account that offers a fixed rate of interest. That way, they are assured of a constant rate that is higher than the average base rate, even though it may not be able to compete with the higher maximum interest rates.
- Withdrawals – Even though these accounts do not hinder anyone from making withdrawals, it is important to ensure that one remains within the guidelines of the account. If there is a minimum balance, stay above it to avoid penalties. It is also important to ask about withdrawal fees if any. Remember that most savings accounts tend to work better for the saver if withdrawals are kept at a minimum.
- Different accounts in different banks – It is important to consider whether it is better to have different accounts at different banks, or to open different accounts at the same institution. As one can see from the accounts highlighted above, there are incentives for working with the same bank on various instruments. If one uses their credit cards, takes loans from them, has unit trust investments and takes insurance from them, then they can leverage this to get more interest. All of these should be considered when considering an account with the aim of making the most of the interest rates offered.
- The savings goals – Anyone who wants to save successfully should make sure that he or she has a savings goal. It could be that one is putting together an emergency fund, saving money for a down payment on a house, or saving for their education. Whatever the goal is, it should inform the savings account selected. One should take note of any introductory interest rates as well, and confirm what they revert to once the introductory period ends.
- Convenience – With the internet, online banking has become a big deal. Some savers will also be happy to know that some accounts will actually reduce transaction fees when a person prefers to do most of their transactions online. If the saver is the kind of person who doesn’t have time to go down to the bank for transactions, or prefers the convenience of banking from his or her home or office, finding out what the bank and the account offer in terms of online convenience is a big plus.
The goal is to ensure that as a saver, one gets the very best deal for their needs. Everything should be considered when figuring out what works for each person because one size does not fit all.
