This article was first published on 22 November 2019 and updated to reflect the latest interest rates.
Often touted as a #LifeHack in advertisements, media and even conversations we have with our colleagues, friends and family, high-interest rates savings accounts have become increasingly popular in Singapore.
It’s hard to see why anyone would pass over such a great deal. In many instances, these high-interest rate savings accounts claim to offer over 3% interest on your balances. This is astronomical compared to the 0.05% offered on many regular savings accounts.
Why Your High-Interest Rate Savings Account Will Often Not Pay The Maximum Interest
If you’ve signed up for a high-interest rate account at any of the banks that offer it, you would quickly realise that it’s almost impossible to earn the maximum interest that are offered by these accounts.
This is because they often require you to jump hoops. These hoops include crediting your salary, which you can obviously only do with one account, as well as completing transactions such as paying a certain number of bills through the account, spending above a certain amount on your credit card with the bank, applying maximum balance cap and even requiring you to purchase financial products such as investments or insurance, which you may already have or do not require, with the bank.
That’s not to say these savings accounts become unsuitable. In fact, many may still offer better interest returns even if you’re unable to accomplish all the tasks that you need to fulfil in order to unlock interest payments.
Why You May Want To Go For A Savings Account That Doesn’t Require You To Jump Hoops
First and foremost, you’re not a circus tiger. Banks, the ringmasters in this situation, should not have the power to make you jump hoops, then decide to light it on fire and add more hoops (by changing its requirements) to make it more difficult (or entertaining?) for you to meet all requirements that unlock the maximum interest payments.
It’s also a little stressful to have to keep track of all these transactions you have to complete each and every month. How much you’ve spent on your eligible credit cards, whether you’ve paid a certain amount of bills by the end of the month and even worry if your employer credits your salary promptly each month. These tasks add little to-dos that can bog us down.
We only have 24 hours each day, and we have to choose where we should spend our free time. Being entertained watching Game of Thrones, the Walking Dead and other awesome series on TV? Getting healthier by going for a run, playing football and swimming? Earning a few hundred dollars more each year choosing the best savings accounts? It’s really a trade-off because it takes time to stay on top of your savings accounts.
Next, any unnecessary transactions you make could negate all your hard work. If you’ve realised you’ve only made $450 in credit card purchases instead of the required $500, you now have to think of the best way to spend $50 to earn your interest this month. This action by itself could render your efforts to earn a higher interest rate useless.
Many times, we could also have other credit cards that offer us better cashbacks or miles than the ones we need to use to unlock better interest rates on our savings accounts. There may also be better investment or insurance options elsewhere, and we should not sign up for one that does not suit our needs just to unlock the bonus interest rates.
One other drawback is that when we exceed the maximum caps placed on our high-interest rate savings accounts, any additional savings will only earn the base 0.05% interest.
The Best Savings Accounts – If You Don’t Want To Jump Through Hoops
Not all banks offer savings accounts with decent interest returns on your savings, especially without having to jump through multiple hoops. To save you time, we’ve done some of the research on which accounts require a minimal level of “jumping hoops” to receive the interest rates they pay.
As a caveat, we realise there may be limited options. And even these options require some hoop jumping, but the barriers (and mental stress to achieve them) are much lower compared to the high-interest rate savings accounts.
|BANK SAVINGS ACCOUNT||RATE (P.A)||TERMS AND CONDITIONS|
|CIMB FastSaver Account||Up to 1.8%||• Must maintain a minimum balance of $1,000
• First $50,000 receives 1.0% p.a.
• Above $50,000 to $75,000 receives 1.5% p.a.
• Above $75,000 to $100,000 receives 1.8% p.a.
• > $100,000 receives 0.6% p.a.
|UOB Stash Account||Up to 1.0%||• First $10,000 receives just 0.05% p.a.
• $10,000 > $50,000 receives 0.8% p.a.
• $50,000 > $100,000 receives 1.0% p.a.
• $100,000 > receives 0.05% p.a.
|Maybank iSAVvy Savings Account||Up to 2.1%||• Applicable to fresh funds above $10,000 deposited from September to December 2019, subject to a cap of $3 million.|
|Standard Chartered e$aver Bonus Interest||Up to 1.95%||• Bonus interest is paid on eligible incremental balances
• Rates only applicable in October 2019 and November 2019
• First $50,000 receives 0.10%; incremental balances receive 1.70% p.a.
• $50,000 < $200,000 receives 0.15% p.a.; incremental balances receive 1.70%
• >$200,000 receives 0.25% p.a.; incremental balances receive 1.70%
|Citi MaxiGain Savings Account||Up to 2.2%||• Must maintain a minimum balance of $70,000
• Up to $150,000 receives base interest of ~ 1% p.a (70% of 1-month SIBOR)
• Bonus rates of between 0.1% to 1.2% p.a. is applicable if you increase or maintain your account balances each month
One other thing you should consider is how much money you should be keeping in your savings account. This is because you could be using your money more efficiently by investing it.
Lastly, what you can actually do just as easily is use a high-interest rate savings account, and credit your salary to it. This should earn you a base interest that’s already decent. You can then put any money beyond the maximum cap levels on your high-interest savings accounts into these savings accounts with a lower barrier to earning decent (albeit slightly less attractive) interest rates.
If you know of other savings accounts that offer savers a decent interest rate, and yet not require us to jump through too many hoops, do share it with us and other readers on our Facebook Page.