Savings account

Beside using your saving account for daily transaction purpose, you can potentially earn a much higher risk-free return! Majority of the people have been using a saving account paying a mere interest of 0.05% since young and have yet to switch out to other saving account. Allow me to share with you 4 different type of saving accounts that could earn you a higher interest!

Below is the summary of the 4 accounts that I will be sharing in details:

OCBC Frank Account

https://www.frankbyocbc.com/products/accounts/frank-account/?pid=sg:en:others:accounts:FRANKAccount:Nov16:internal:depositsLP:::::

Among all the saving accounts, this is the best account catered for students/young adults. Let's explore the benefits that this account got to offer:

• It offer a much higher interest rate than normal saving account. (A 0.2% interest compared to normal saving account of 0.05%)
• There's no need for any initial deposit for account opening
• No minimum balance is required for account holder below 26 years old. (As compared to most saving account that required a minimum balance of $500 else a monthly fee of $2 will be charged)
• Cool debit card design and lifetime card annual fee waiver

Requirement for opening this account: You only need to be above 16 years old!

How to apply: Online / Mail / Visit any OCBC or Frank branch

How can you utilize this account fully:

• You are a student or a working adult earning less than $2,500
• Use this as your main saving account for any deposit or withdrawal
• Probably set aside a deposit of minimum 1 month expense for daily withdrawal or spending purpose
• Any excess savings should be transferred to CIMB FastSaver Account to take advantage of the higher interest

Summary: Use this account as your active saving account for daily withdrawal or spending purpose. Recommended for all students to have this account opened as soon as possible.

CIMB FastSaver Account

http://www.cimbbank.com.sg/en/personal/products/accounts/savings-accounts/cimb-fastsaver-account.html

This account is straight forward to understand. For any amount below $50,000, you will earn an interest of 1% provided your account have a minimum balance of $1,000.

Here are some of the benefits of this account:

• Attractive interest rate of 1% on your saving account where you can transfer your fund anytime with no lock-down period (Compared to some fixed deposit that lock-down your fund for certain period and some even has lower interest)
• There's no fall below fee! (Even your account balance fall to just $1, you need not pay for any service fee as compared to most banks that charge a monthly service fee of $2 if your account balance fall below $500)
• 1% interest is for you to keep by just deposit your money in the account (No need to fulfill criteria such as credit card spending or salary crediting)
• Internet banking available to easily transfer your funds around
• Interest accrued daily and credited monthly (provided account balance is at least $1,000 on any given day)

 Requirement for opening this account:

• You only need to be above 16 years old
• Initial deposit of $1,000 (which you can withdraw with no penalty after account is opened)

How to apply: Only online application!

How can you utilize this account fully:

• Student with excess savings lying around or working adults earning less than $2,500
• Deposit any extra funds you have after setting aside 1 month expenses in your active saving account
• Have no ideas of what to do with these extra funds
• Maintain an account balance of $1,000

Summary: Unsure of what to do with your extra savings and want to earn a risk-free return, this account provides depositors with a decent return of 1%. Recommended for students with at least $1,000 to set aside and working adults drawing a salary lesser than $2,500.

OCBC 360 Account (updated 1st Apr 2017)

https://www.ocbc.com/personal-banking/accounts/360-account.html?pid=sg:en:others:accounts:360Account:Nov16:internal:depositsLP:::::

This account is by far the best saving account catered toward working adults earning a salary of at least $2,500.

There are 5 criteria to be fulfilled to earn the maximum bonus interest on this account
Criteria 1 (Salary): Credit your Salary of at least $2,000 through GIRO to earn 1.2%
Criteria 2 (Payment): Pay at least 3 bills online or through GIRO with a total amount of at least $150 to earn 0.3%
Criteria 3 (Spend): Spend at least $500 using OCBC credit cards
Criteria 4 (Wealth): Insure or invest with OCBC. Earn up to 1.2%
Criteria 5 (Save): Earn extra 1% on the first $70,000 if your account balance is $200,000 and above
Note: Each criteria is standalone from each other. Every criteria fulfilled, the account will earn that criteria bonus interest.

Which criteria you should be able to fulfill (Fresh graduates)

• Criteria 1 can be easily fulfilled by securing a job paying at least $2,500 monthly. Therefore the net salary credited after CPF contribution will be $2,000 satisfying criteria 1. (Bonus interest of 1.2% is earned)
• Criteria 2 can be easily fulfilled by taking over in paying for family bills (E.g. phone bill, Broadband subscription, utility bills) Criteria 2 is satisfied. (Bonus interest of 0.3% is earned)
• Criteria 3 can be easily fulfilled by asking a group of friends to dine out and to shop for family daily necessity paying using the credit card. Criteria 3 is satisfied. (Bonus interest of 0.3% is earned)
• Criteria 4 can't be easily fulfilled as your current net salary might not be enough after fulfilling criteria 2 & 3. Criteria 4 is not satisfied (Bonus interest of 1.2% is forgone)
•  Criteria 5 can't be achieved by fresh graduates and leaving such huge amount of cash in saving account is unwise. Extra funds are better off in investment yielding higher returns. Criteria 5 is not satisfied (Bonus interest is forgone)
• You will earn an extra base interest of 0.05% on your account balance.

Taking in consideration that criteria 1 to 3 will be fulfilled and the add-on of base interest, the interest yield by this account will be: 1.2% + 0.3% + 0.3% + 0.05% = 1.85% (1.85% is also the effective interest rate)

Requirement for opening this account:

• You need to be above 18 years old
• An initial deposit of $1,000

How to apply: Online / Visit any OCBC branch / Internet banking

How can you utilize this account fully:

• Drawing a monthly salary of at least $2,500 and GIRO your salary into this account to qualify for the main bonus interest of 1.2% 
• Able to fulfill all other criteria (At least criteria 2 & 3)
• Savings lesser than $70,000

Summary: This account is catered for working adult that will be drawing a monthly salary of at least $2,500 and GIRO their salary into this account.

UOB 1 Account

http://www.uob.com.sg/personal/deposits/chequeing/one_account.html?s_cid=OneAcc_topmenu

Reading this table can be quite misleading to calculate the effective interest rate (EIR)

Allow me to do an interest breakdown calculation on the different amount of funds deposited.

There are 2 criteria needed to be fulfilled to earn the bonus interest on this account

Criteria 1: Spending $500 monthly on your UOB card

Criteria 2: Crediting your salary (at least $2,000) or paying 3 bills monthly via giro)

Note: It is a must to fulfill criteria 1 first to earn the bonus interest. Fulfilling criteria 2 without fulfilling criteria 1 will result your account earning just the base interest of 0.05%

Supposingly $10,000 in your saving account (Effective interest rate=1.5% p.a. with both criteria met)

By fulfilling criteria 1 will net you a return of 1% on your account balance. In addition, by fulfilling both criteria will earn you an interest of 1.5%. Therefore by fulfilling both criteria will net you an effective interest of 1.5%

E.g. Fulfilling criteria 1:

Interest earned per annum : 0.01 x $10,000 = $100

E.g. Fulfilling both criteria:

Interest earned per annum: 0.015 x $10,000 = $150 

Effective Interest rate p.a. : $150 / $10,000 = 0.015 = 1.5%

Supposingly $30,000 in your saving account (Effective interest rate=1.83% p.a. with both criteria met)

By fulfilling criteria 1 will net you a return of 1% on your first $10,000 and 1.5% on your next $20,000. In addition, by fulfilling both criteria, will earn you an interest of 1.5% on your first $10,000 and 2% on your next $20,000. Therefore by fulfilling both criteria will net you an effective interest of 1.833% p.a.

E.g. Fulfilling criteria 1:

Interest earned per annum : 0.01 x $10,000 + 0.015 x $20,000  = $400

E.g. Fulfilling both criteria:

Interest earned per annum: 0.015 x $10,000 + 0.02 x $20,000 = $550 

Effective Interest rate p.a. : $550 / $30,000 = 0.01833 = 1.83%

Supposingly $50,000 in your saving account (Effective interest rate=2.43% p.a. with both criteria met)

By fulfilling criteria 1 will net you a return of 1% on your first $10,000 and 1.5% on your next $20,000 and 2% on your next $20,000. In addition, by fulfilling both criteria, will earn you an interest of 1.5% on your first $10,000 and 2% on your next $20,000 and another 3.33% on your next $20,000. Therefore by fulfilling both criteria will net you an effective interest of 2.43% p.a.

E.g. Fulfilling criteria 1:

Interest earned per annum : 0.01 x $10,000 + 0.015 x $20,000 + 0.02 x $20,000 = $800

E.g. Fulfilling both criteria:

Interest earned per annum: 0.015 x $10,000 + 0.02 x $20,000 + 0.0333 x $20,000 = $1,216

Effective Interest rate p.a. : $1,216 / $50,000 = 0.0243 = 2.43%

Requirement for opening this account: You only need to be above 18 years old!

How to apply: Online / Visit any UOB branch

How can you utilize this account fully:

• Consistent monthly spending of at least $500 using UOB card (Very Important)
• Working adult crediting a salary of at least $2,000 monthly or paying 3 bills monthly via giro
• Savings with more than $30,000 in this account

Summary: This account is catered for working adult that will be spending at least $500 monthly with their UOB card.

Conclusion

If you are a student or a working adult earning less than $2,500, it's time to switch to OCBC Frank account which yield a higher interest than your current saving account which yield 0.05% interest. Make OCBC Frank account your main active transaction account for daily spending or withdrawal. Do not hold too much cash in this account ultimately. 

Park any excess cash into CIMB FastSaver to earn a better risk-free return of 1%. There are only less than 10 ATMs for CIMB, therefore it is important to ensure you have an active saving account opened with 1 of the local banks in Singapore for your daily transaction.

If you are a working adult earning at least $2,500, it's time to switch your main saving account to either OCBC 360 or UOB 1 account. OCBC 360 account is a more preferred saving account as just by crediting salary in the account will allow depositor to earn a 1.2% interest while for UOB 1 account, depositor must spend at least $500 monthly on their credit card to qualify for the bonus interest. Both accounts will net you a return around 1.5%-1.85% p.a. which is pretty attractive considering it is risk-free interest.

Although interest of 1.5% may not seems significant, however by taking in consideration of the power of compounding, your savings will grow even more in time to come. 

Hesitate no more, the longer you procrastinate, the more you will lose out! Be it you are a student or working adult, set aside some time soon to open the relevant account to maximize your risk-free returns. 

Lastly do share around this great investment opportunity to your friends and family!

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Last updated Jun 2017