Business & Economy Personal Finance Which High-Interest Savings Accounts Should You Open and Why

Which High-Interest Savings Accounts Should You Open and Why

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Though selecting what type of bank account you should open can be difficult, having a clear goal on what you intend to do with a new one can usually bring clarity about what bank account you need

 

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How to distribute your savings and funds into a bank account can be unclear, especially if it’s unclear which accounts do what. Read to find out how to best use available bank accounts.

Types of Bank Accounts

There are four types of bank accounts: current, fixed deposit, savings, and multi-currency. Let’s go through what each has to offer.

current account
Source: Unsplash

Current Account

A current account is intended to be transactional and not meant to store money for long periods. As this type of account is optimised for more convenient transactions, current accounts can be accessed through online banking, debit cards or ATMs.

The downside of this type of account is that it accrues no interest and typically requires you to maintain a minimum balance, lest a balance fee be incurred. As such, this type of account is ideal for storing funds used regularly.

Best Cashback Debit Card: SAFRA DBS Debit Card

  • To qualify for cashback, cardholder must spend a monthly minimum of S$400
  • Cashback earnings limit is S$50
  • Must be a SAFRA member (S$80 for 2-year membership)

The SAFRA DBS Debit Card is a fantastic cashback card for anyone looking for a diverse card that earns cashback on all spending. Spending above S$400 monthly with this card qualifies you for 2% cashback on all contactless MasterCard spend, on top of 1% on online spending and 0.3% on retail. This card also has one of the highest cashback caps at S$50, providing great value for anyone looking to use a card for frequent and diverse spending

  • To qualify for cashback, cardholder must spend a monthly minimum of S$400
  • Cashback earnings limit is S$50
  • Must be a SAFRA member (S$80 for two-year membership)

The SAFRA DBS Debit Card is a fantastic cashback card for anyone looking for a diverse card that earns cashback on all spending. Spending above S$400 monthly with this card qualifies you for 2% cashback on all contactless MasterCard spend, on top of 1% on online spending and 0.3% on retail. This card also has one of the highest cashback caps at S$50, providing great value for anyone looking to use a card for frequent and diverse spending

fixed deposit
Source: Unsplash

Fixed Deposit

Fixed deposit accounts are a low-risk way for consumers to invest. They allow consumers to earn interest on funds placed in the bank for a predetermined or fixed time.
One advantage of such accounts is their ease of use: deposit your money, wait for the period, and reclaim your funds plus interest. The interest rates for different banks will vary and determine how competitive a bank’s fixed deposit account is.

Savings Account

savings account singapore
Source: Unsplash

Savings accounts are generally best used for just that — savings. Savings accounts often sit in the happy middle ground between current and fixed deposit accounts. They offer a higher interest rate than current accounts but also allow you to withdraw funds without penalty.

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Competitive Interest for Incremental Savers: OCBC 360 Account

  • Minimum Initial Deposit:
  • Minimum Average Daily Balance:
  • Fall Below Fee:
  • Max Effective Interest Rate: at balance

Rate Type Details & Requirements Interest Rate
Base Rate No Requirements; applied to entire balance 0.05% p.a.
Grow Bonus
  • Maintain balance of at least S$200k
  • (Bonus interest added to base rate)
+2.40% p.a. on first S$100k
Step-Up Bonus
  • Deposit at least S$500/month
  • (Bonus interest added to base rate & applied
  • to specific band of balance)
+1.20% p.a. on first S$75k
+2.40% p.a. on next S$25k
Spend Bonus
  • Spend S$500/month on OCBC credit card
  • (Bonus interest added to base & applied to
  • specific band of balance)
+0.60% p.a. on first S$100k
Salary Bonus
  • Credit S$2k+ salary to account via GIRO
  • (Bonus rates added to base rate & applied
  • to specific band of balance)
+2.00% p.a. on first S$75k
+4.00% p.a. on next S$25k
“Wealth” Bonus
  • Insure or invest with OCBC Bank
  • (Bonus rates added to base rate & applied
  • to specific band of balance)
+1.20% p.a. on first S$75k
+2.40% p.a. on next S$25k
Max Effective Interest Rate: 7.65% p.a. (at S$100k balance)
Max EIR is highest at a S$100k balance even with the Grow Bonus left inactive. Promotional rates, if any, are not included

If you’re willing to save at least S$500 per month, OCBC 360 Savings Account may just be your best option. Like competitors, this account offers a boosted interest rate for those who credit their monthly salary of at least S$1,800, offering interest rates starting at 2.0% p.a. for a minimum salary of S$21,600. Purchasing an eligible insurance or investment product will also boost the interest you earn on the savings account. These bonuses add up to 6.15% p.a. effective interest on top of the 0.05% p.a. base rate. Any bonus interest applies up to the 1st S$100,000 of the balance (excess balance earns just the base rate).

OCBC 360 Account stands out from its competitors by rewarding continued growth. Making a monthly deposit of at least S$500 earns a bonus of up to 2.40% p.a. effective interest. Overall, while several accounts reward salary crediting & product use and others reward consistent saving, OCBC 360 is one of the few that offers bonus interest for both. Combining all bonuses (including a 2.40% p.a. bonus for large balance sizes), consumers can earn a maximum effective interest rate of 7.65% p.a. with a S$100,000 balance.
This makes OCBC 360 Savings Account the best in Singapore for Incremental Savers.

  • Minimum Initial Deposit:
  • Minimum Average Daily Balance:
  • Fall Below Fee:
  • Max EIR: at balance

OCBC 360 Account Interest Rates
Base Rate: No requirements (applied to entire balance)

  • 0.05% p.a.
Grow Bonus: Maintain balance of at least S$200k (bonus interest added to base rate)

  • +0.80% p.a. on first S$70k
Step-Up Bonus: Deposit at least S$500/month (bonus interest added to base rate & applied to specific band of balance)

  • +0.20% p.a. on first S$35k
  • +0.40% p.a. on next S$35k
Spend Bonus: Spend S$500/month on OCBC credit card (bonus interest added to base & applied to specific band of balance)

  • +0.20% p.a. on first S$35k
  • +0.40% p.a. on next S$35k
Salary Bonus: Credit S$2k+ salary to account via GIRO (bonus rates added to base rate & applied to specific band of balance)

  • +1.20% p.a. on first S$35k
  • +2.40% p.a. on next S$35k
“Wealth” Bonus: Insure or invest with OCBC Bank (bonus rates added to base rate & applied to specific band of balance)

  • +0.60% p.a. on first S$35k
  • +1.20% p.a. on next S$35k
Max Effective Interest Rate:

  • 3.35% p.a. (at S$70k balance)
Max EIR is highest at a S$70k balance even with the Grow Bonus left inactive

If you’re willing to save at least S$500 per month, OCBC 360 Savings Account may just be your best option. Like competitors, this account offers a boosted interest rate for those who credit their monthly salary of at least S$1,800, offering interest rates starting at 2.0% p.a. for a minimum salary of S$21,600. Purchasing an eligible insurance or investment product will also boost the interest you earn on the savings account. These bonuses add up to 6.15% p.a. effective interest on top of the 0.05% p.a. base rate. Any bonus interest applies up to the 1st S$100,000 of the balance (excess balance earns just the base rate).

OCBC 360 Account stands out from its competitors by rewarding continued growth. Making a monthly deposit of at least S$500 earns a bonus of up to 2.40% p.a. effective interest. Overall, while several accounts reward salary crediting & product use, and others reward consistent saving, OCBC 360 is one of the few that offers bonus interest for both. Combining all bonuses (including a 2.40% p.a. bonus for large balance sizes), consumers can earn a maximum effective interest rate of 7.65% p.a. with a S$100,000 balance.

This makes OCBC 360 Savings Account the best in Singapore for Incremental Savers.

Multi-Currency Account

A multi-currency account’s function is quite self-explanatory. The account owner can store different currencies under a unified account number.
The primary advantage of this account type is convenience — using a multi-currency account greatly streamlines the process of managing fees over borders, whether you’re a business or an individual. The disadvantage comes from such an account’s transaction and annual maintenance fees.

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How Do I Decide What Account(s) To Open?

Business vs Individual

Unsurprisingly, businesses will have vastly different needs from their bank accounts compared to individuals. However, both would generally appreciate the value of current and savings accounts.

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Whilst storing the bulk of your money as either an individual or a business in a savings account will greatly increase the money you will gain from interest rates, only being able to draw money from your account twice or thrice a month is generally not tenable. The ease in making transactions that a current account affords is often a necessity. As such, businesses and individuals usually benefit from a current and savings account.

What Is the Goal of Your Account?

An important consideration is what you intend this new bank account to do for you when you deposit your funds. For instance, a fixed deposit account may be ideal if you intend to store your funds for a period and have no foreseeable need to use these funds.
Because these different types of bank accounts have such distinct uses and purposes, determining which type of account to open is often much easier if you have a goal in mind with opening a bank account.

multi currency acccount
Source: Pexels

Who Should Open a Multi-Currency Account?

Though the function of a multi-currency account is self-explanatory in many ways, it can still be confusing if you should open such an account or if you make enough international transactions to make such an account worthwhile.
For businesses operating in multiple countries, a multi-currency account is a no-brainer, not only for the convenience of consolidating payments from anywhere in the world to one account but also because it allows you to make the most of conversion rates between currencies. Otherwise, for businesses and individuals alike, several use cases would justify a multi-currency account.

Should I Open Savings Accounts in Multiple Banks?

In short, yes. Let’s review some advantages of opening multiple savings accounts in multiple banks.

See also  Best Savings Accounts That Give You High Returns

Finding the Best Interest Yields

Having multiple savings accounts with different banks can be a short-term investment strategy. As banks’ interest rates change over time, the bank that offers the most competitive interest rates may change.
Having savings accounts in multiple banks is one way to potentially earn higher interest rates. As rates change, the money between these accounts can be moved accordingly to get the highest yields.

Making Use of Bonuses

A strategy that banks often use for attracting new customers is offering bonuses for opening new accounts with them. To earn this bonus, you typically have to open an account with the bank and maintain a balance for a period of time. These bonuses can be quite significant, so often, it’s worth putting in the effort if you have the funds to spare.

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Insuring your money

Having your savings spread between multiple savings accounts is also a way to insure your money. In Singapore, the deposit insurance scheme ensures S$75,000 of your funds per bank, with all full banks and finance companies in Singapore being members of this scheme. As such, splitting your savings between multiple banks into different savings accounts allows you to insure a large amount of funds.

Conclusion

Though selecting what type of bank account you should open can be difficult, having a clear goal on what you intend to do with a new one can usually bring clarity about what bank account you need. Click to find out more about savings and fixed deposit accounts.

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The article originally appeared on ValueChampion.

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