The humble savings account is an instrument as old as banks themselves. Not surprisingly, they work in fundamentally the same way: You deposit cash, and in return, the bank pays you some interest along with giving the promise of allowing you to withdraw your funds at any time.
Today’s savings accounts come in several flavours that provide additional functionality, such as allowing you to use them to pay bills, set regular payment instructions (also known as GIRO), or make withdrawals 24/7 from Automated Teller Machines (ATMs).
These are your plain vanilla accounts. You can make deposits and withdrawals from bank branches as well as a network of ATMs islandwide. These accounts provide a nominal interest rate.
In addition to having basic features of savings accounts, current accounts allow you to issue cheques that would automatically pay the recipient or bearer from funds in the current account.
These accounts provide you with separate ‘compartments’, one for each type of currency. After currency conversion is made at the point of deposit, you can then make transfers and payments in the respective foreign currency without incurring additional conversion fees.
Despite their name, so-called “high-interest” savings accounts only provide marginally higher interest than their regular savings account cousins, while expecting much heavier patronage and commitment to their respective banks, such as having your salary credited with them and meeting a minimum credit card spending each month.
While savings accounts are undoubtedly an indispensable part of modern life, it doesn’t mean that you should park the majority (or even a significant portion) of your liquid funds there.
This is because for the longest time, banks have been able to get away with paying you minuscule amounts of interest – amounts that cannot even hope to match the rate of inflation – which effectively means the value of your savings is deteriorating every day you keep your spare funds with a bank.
Don’t believe us? Here’s a comparison of the interest rates offered by banks in Singapore, including “high-interest” savings accounts (as of June 2022):
|Savings Account||Interest Rate (per annum)||Remarks|
|DBS Multiplier||0.05% to 3.00%||To hit the highest interest tier, you need eligible monthly transactions in excess of $30,000.|
|OCBC 360 Account||0.05% to 2.38%||To earn the maximum interest, you need to maintain an average daily balance of at least $200,000.|
|UOB One Account||0.05% to 2.50%||Maximum interest is only earned on part of your monies, rendering the effective interest on your entire balances lower.|
|CIMB Fast Saver Account||0.15% to 3.00%||To enjoy the highest theoretical interest, you need to purchase CIMB insurance/investment products.|
|Standard Chartered Bonus$aver Account||0.01% to 2.38%||To earn bonus interest, you need to perform tasks like salary crediting, make investments, buy insurance, and pay bills using Standard Chartered.|
|Bank of China Smart Saver||0.10% to 3.00%||Earning the maximum interest is only possible by fulfilling criteria like purchasing insurance, credit card spend, bill payment and salary credit.|
That is why savvy individuals like yourself would be looking at how you can make your money work harder.
Decentralised finance is an emerging field with fluid regulations. Learn more about the risks involved.