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 up such a great deal. In many instances, these high-interest rate savings or multiplier accounts claim to offer over 3% interest on your balances. This is astronomical compared to the low interest rate of 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 will quickly realise that it’s almost impossible to earn the maximum interest that is 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 a 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 are unsuitable. In fact, many may still offer better interest rates even if you’re unable to accomplish all the tasks that you need to fulfil in order to unlock the bonus interest.
Read Also: [2022 Edition] Best Savings Accounts for Working Adults in Singapore
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 through 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 the requirements that unlock the maximum bonus interest.
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 how we are going to spend our free time. Some ways include being entertained by watching House Of The Dragon, The Lord Of The Rings: The Rings Of Power and other awesome series on TV; getting healthier by going for a run, playing football or swimming; or earning a few hundred dollars more each year by meeting all the conditions each month to earn a higher interest rate on your multiplier 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 cashback or miles than the ones we need to use to unlock better interest rates on our multiplier savings accounts. There may also be better investment or insurance options elsewhere, and we should not sign up for ones that do 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 may only earn the base interest rate, which can be as low as 0.01%.
Read Also: Here’s Why You Need To Optimise Your Savings Account Before Making Any Other Investments
The Best Savings Accounts – If You Don’t Want To Jump Through Hoops
Not all banks offer savings accounts with decent interest rates on your savings, especially those that do not require you 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 a high interest rate.
As a caveat, we realise there may be limited options. And even though these options require some hoop jumping, the barriers (and mental stress to achieve them) are much lower compared to the high-interest rate savings accounts.
Rates are accurate at the time of writing. With banks starting to revise the interest rates on their high interest accounts amid the rising interest rate environment, these rates might be subject to revision in the (near) future.
| BANK SAVINGS ACCOUNT | RATE (P.A) | TERMS AND CONDITIONS |
| CIMB StarSaver Account | Up to 2% | • Must maintain a minimum balance of $1,000 • First $100,000 receives 1% p.a. • Next $150,000 receives 1.50% p.a. • Above $250,000 receives 2.00% p.a. |
| Standard Chartered e$aver Bonus Interest | Up to 2.0% | • Must maintain a minimum balance of $1,000 • Bonus interest is paid on eligible incremental fresh balances up to $1,000,000 • Deposit balance earns base interest of 0.05%; incremental balances receive 1.95% p.a. (Total interest of 2.00% p.a.) • Rates are only applicable from 1 October to 30 November 2022 |
| Maybank iSAVvy Savings Plus Account | Up to 1.76% | • Minimum initial deposit of $500 • Bonus interest of 1.56% p.a. awarded every 6 months on any increase in the average daily balance during the 6-month period • First $5,000 receives effective interest of 0.15% p.a. • $5,000 < $50,000 receives effective interest of 0.2% p.a. • $50,000 > receives effective interest of 0.2% p.a.. |
| UOB Stash Account | Up to 1.0% | • Must maintain a minimum balance of $1,000 • To earn the higher interest, must either maintain or increase your monthly average balance compared to the previous month • First $10,000 receives just 0.05% base interest p.a. • $10,000 > $40,000 receives 0.05% base interest p.a.; bonus interest 0.25% p.a. (Total interest of 0.30% p.a.) • $40,000 > $70,000 receives 0.05% base interest p.a.; bonus interest 0.55% p.a.(Total interest of 0.60% p.a) • $70,000 > $100,000 receives base interest 0.05% p.a.; bonus interest 0.95% p.a. (Total interest of 1.00% p.a) • $100,000 > receives 0.05% base interest p.a. |
| Citi MaxiGain Savings Account | Up to 0.31% | • No minimum balance required to earn base interest of 0.01% • Up to $70,000 receives base interest of ~ 0.025% and 0.3% p.a (bonus interest) • Bonus rates of between 0.025% to 0.3% 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.
Read Also: Beginners’ Guide To Fixed Deposits In Singapore
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 rate 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 earn a decent (albeit slightly less attractive) interest rate.
If you know of other savings accounts that offer savers a decent interest rate and yet do not require us to jump through too many hoops, do share them with us and other readers on our Facebook Page.
This article was first published on 22 November 2019 and updated to reflect the latest interest rates.
The post Best Savings Accounts In Singapore – If You Don’t Want To Keep Jumping Through Hoops appeared first on DollarsAndSense.sg.
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