Sunday, April 17, 2011

Best Savings Account Interest in Singapore

The current environment is the super low interest environment.  I have just checked, DBS/POSB, OCBC & UOB, all three local big brothers in banking are offering savers a pathetic 0.1% pa on their savings accounts for their first S$50,000.00, and then slightly higher after that.

Standard Chartered bank offers its e$aver account holders 0.15% pa on their savings accounts, which is 50% higher than all the 3 local banks, sounds good in percentage huh, but not really in absolute terms.

Maybank is offering its savers 0.1875% for the first S$5,000.00, then 0.3% from S$5000 to S$50,000.00.

Then it comes Plus! U, a collaboration between NTUC and OCBC.  This savings account does not offer you any over the counter services, everything is done through internet banking.  As such, this savings account offers you, again, slightly better interest, 0.2% pa for the first S$50,000.00, then 0.4% after that.   The good part about this is that, they also give you a credit card, which you can use as an NTUC link card and membership card.  You can get rebates from your purchases at Fairprice, and ear Link points.

The ultimate best savings account should be CIMB's StarSaver account.  It gives you 0.8% pa if your month-end incremental deposit is S$500 or more; and 0.5% if less than S$500.  This sounds really good, but then the downside is that they only two branches in Singapore, both are far away from me.

Singapore's inflation is going up, ~5% based on January's data.  The core inflation, which excludes private transport and housing costs, is still around 2-3%.  Even at the low core inflation rate, the real saving account interest rate is negative!  You are losing money every single minute you lend the banks your savings.  Singapore always tames inflation by controlling the sing dollar's exchange rate, but not much on the interest rate.  I think it is high time MAS raised the interest rate too, in order not to blow a bubble and penalizing the diligent savers!

As you can see from the savings account interest rates, none of them is even close to what the inflation rate is. This low interest environment is going to force lots people to seek better returns elsewhere, and stock market is one place people can think of.

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