Almost everyone in Singapore has a savings account with a local bank. A large majority of us may even have multiple accounts with different banks, as we aim to maximise perks and interest rates on offer by each of these banks.
Opening a savings account in Singapore is a relatively simple process that doesn’t require you to think much. Depending on whether you have an existing relationship with the bank, and the savings account that you intend to open, you may not even need to head down to a bank branch to open your account.
In addition, opening a savings account doesn’t appear to cost anything, aside from having to make a minimum initial deposit. But are these savings accounts really “free” just because there are no upfront costs being incurred?
Here are some common costs that people should know about before they open a savings account.
Fall Below Fee
The fee that most people are familiar with is the Fall Below Fee. This monthly fee automatically applies if your Monthly Average Balance (MAB) falls below a certain level.
Do note that MAB is not the amount that you have at the final day of each month, but rather, the total sum of daily balance in your account divided by the number of days in the month. So if the MAB for the savings account is $1,000, and you keep about $900 in the account before topping it up to $1,000 two days before the end of the month, you will be charged the fall below fee.
Unless the account that you have is designed for kids or students, most savings accounts in Singapore will tend to have a MAB. The MAB tends to range from $500 to $3,000 so be sure that you are confident of keeping your level of savings above the MAB before you open a savings account.
Fall below fees in Singapore can range from $2 to $7.50 per month.
Early Account Closure (Usually Applies Before 6 Months)
Most people do not think about the Early Account Closure fee, until they realised that they are not able to stay above the MAB. That is when they may decide to close their savings account early to avoid continuously paying the fall below fee, only to be met with the Early Account Closure fee of $30.
To be fair to the banks, this is necessary to ensure that customers do not frivolously open savings accounts in order to enjoy promotions, only to close it soon after.
By the same token, consumers should avoid signing up for a savings account at a roadshow just to enjoy a free gift, only to realise immediately after that they have to pay an early account closure fee, or a fall below fee (up to $7.50 monthly) if they are unable to reach the minimum monthly account balance required.
Foreign Currency Deposit & Withdrawal Fee
In order to cater to the wider needs of customers who travel often, most local banks now offer what is known as a multi-currency savings account. These savings accounts give customers the convenience of being able to hold multiple currencies, in addition to the Singapore Dollar (SGD), in one single savings account.
They are typically two ways to get the foreign currencies that you need in the savings account.
The first way is to convert the SGD in your account to the foreign currency that you need via the foreign exchange rate service offered by the bank.
The other method will be to directly deposit foreign currencies that you have into the multi-currency savings account.
However, before depositing foreign currencies into the multi-currency savings account, you should first know that most banks in Singapore would charge what is called a “commission-in-lieu of exchange”. This is a fee they charge you for when you deposit or withdraw foreign currencies without any foreign exchange. The fee can range from 1% or more, depending on the bank that you use and the foreign currencies that you are depositing or withdrawing from the account.
Monthly Account Fee (also known as “Monthly Service Fee”)
A simple fee that may catch some consumers by surprise, there are a few savings account in Singapore that charges customers a flat monthly account fee. Savings accounts that incur such fee include the UOB i-Account ($2 per month) and the DBS eMulti-Currency Autosave Plus Account ($2 per month).
This monthly account fee is charged to customers on top of any extra fee they may also incur, such as the fall below fee.
Understand The Fees Before You Signing Up For A Savings Account
Aside from the fees that highlighted above, there are many other fees that you may be charged if you utilise services that are tied to your savings account. These would include telegraphic transfers, remittance services, chequebook charges and others.
It’s unrealistic to expect that banks should be providing all these banking services to customers at no extra cost. Banks are for-profit entities and the services that they provide, when used, comes at a cost.
As consumers, our responsibility is to ensure that we understand the various costs that we may incur that is associated with the savings account that we have.
What are some other fees that we may have missed out on? Share them with us on our Facebook page.
DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.