SINGAPORE: Local banks, including DBS, OCBC, and UOB, have recently launched lockable accounts to offer customers an added layer of protection against scams. However, the interest rates provided by these locked accounts have raised concerns among financial analysts, who indicated that deciding to forgo higher interest rates depends on several key factors.

In a recent statement, DBS Bank announced the introduction of its “digiVault” MoneyLock account. Customers who open this account and make deposits between Nov 27 and Feb 29 of the following year can benefit from an additional 1.8% annual interest rate on top of the existing base interest rate, which currently stands at 0.05%.

However, customers holding high-interest Multiplier accounts with DBS Bank can typically enjoy an annual interest rate of at least 1.8%.

This means that individuals depositing $50,000 into the “digiVault” account can expect to earn approximately $200-$300 in the first year after factoring in the preferential interest rate. In contrast, depositing the same amount into a Multiplier account for one year would yield an interest of $900 or more.

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UOB has not yet disclosed the interest rate for its locked account. According to industry experts, the UOB One account, known for offering high interest rates of up to 7.8% annually, is unlikely to provide such rates for locked accounts.

Financial analysts have emphasized that there is a trade-off between higher interest rates and the security offered by locked accounts. They suggest that deciding to deposit money into a locked account with lower interest rates depends on factors such as the deposit amount, future financial plans, and personal preferences.

Analysts told Lianhe Zaobao that individuals with conservative personalities, those concerned about potential scams, older people with substantial savings and limited technological familiarity, and individuals in the active saving stage may be more inclined to open locked accounts, even if they yield lower interest rates, to safeguard their savings.

The industry insiders further noted that banks will likely introduce measures that balance demand and necessity concerning locked accounts and interest rates.

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A bank that has kicked off the MoneyLock feature with a balanced approach is OCBC. OCBC customers can continue to enjoy their existing interest rates without opening new accounts.

Starting today (30 Oct), OCBC customers can lock their deposits without requiring a new account. The locked and unlocked funds in a customer’s existing savings account will be combined, and the entire amount will earn the same interest rate.

Essentially, OCBC 360 Account holders who choose to lock a portion of their deposits will still benefit from the annual interest rate ranging from 2% to 7.65% offered by the 360 Account.

Meanwhile, the introduction of locked accounts also raises concerns regarding unlocking, which typically requires customers to visit bank branches in person. This may result in longer waiting times for banking services.

Analysts have highlighted that some banks mandate customers to unlock their accounts offline, which could lead to increased footfall at bank branches and subsequent delays for customers. Analysts recommend that individuals maintain their emergency funds in ordinary, unlocked accounts to avoid unnecessary delays during emergencies.