For comparison, OCBC’s 360 Account pays up to 4.65 per cent a year on the first S$100,000 when customers credit their salary, save at least S$500 a month and spend with the bank. The rate goes up to 7.65 per cent for those who also invest and buy insurance through the bank.
At DBS, the Multiplier Account offers a maximum interest rate of up to 4.1 per cent a year for the first S$100,000 in deposits, if customers credit their salary to the bank and transact in three categories with a total volume of S$30,000 or more a month.
While other banks have yet to move, industry watchers do not think this will be the case for long as market expectations build up for the possibility of rate cuts by the US Federal Reserve this year.
Noting how the banks moved quickly in lockstep when raising interest rates, Phillip Securities’ senior financial services manager Elijah Lee said: “You just need one bank to move, and the others will likely follow suit.”
When that happens, the effort involved in switching savings account may not be quite worthwhile.
THE RISK OF OVERSAVING?
Another discussion on online forum Reddit focused on whether to put more money, specifically S$150,000, into UOB’s One account.
This is because while the bank lowered its bonus interest for the first S$100,000, it introduced two new tiers that offer as much as 6 per cent for those with more savings.
For example, account holders will earn 4.5 per cent interest on S$25,000 after the S$100,000 mark. The rate goes up to 6 per cent for the next tier of S$25,000. Both interest rates are up from the existing 0.05 per cent.
This means that the effective interest rate for a customer with S$150,000 in deposits comes up to 4 per cent.
“To be honest, 4 per cent is not bad but always think about the hoops that you have to jump through for that,” said Mr Lee.
“If you are going to force yourself into something like taking up a new card and spending more, please take a step back and ask yourself if the increased interest is worth the additional steps you need to take.”
