Local Banks DBS, OCBC, and UOB Enhance Savings Rates to Attract Savers
SINGAPORE: In a bid to stay competitive amid a rising rate environment, DBS, OCBC, and UOB have raised interest rates on their flagship savings accounts twice in the past four months. UOB announced last week that it would lift the maximum bonus interest rate on its One account to 7.8% per year, more than double from the previous 3.6%. This follows similar hikes by the other local banks in early November.
OCBC now pays a maximum of 7.65% per year for its 360 savings account, up from 4.05%, while the highest rate on DBS’ Multiplier account increased from 3.5% to 4.1% per annum. These rate increases are welcome news for savers following two years of low interest rates amid the COVID-19 pandemic. In fact, OCBC’s 360 account and UOB’s One account now offer the highest rates since their launch.
Understanding the Conditions
However, savers should note that there are conditions to meet in order to achieve the highest advertised rates. These flagship savings accounts feature tiered interest rates that increase as customers grow their account balance, spend on eligible cards, and engage in other transactions with the bank, such as mortgages or insurance plans.
For example, DBS’ maximum interest rate of 4.1% applies to the first S$100,000 in a Multiplier account when the account holder credits an income stream—like salary or stock dividends—while accruing at least S$30,000 in eligible transactions a month across any three categories. These categories include credit card spending, home loan instalments, insurance, and investments.
At OCBC, the bank pays 4.65% per year on balances up to S$100,000 when customers credit at least S$1,800 of salary through GIRO, increase their account balance by at least S$500 a month, and spend a minimum of S$500 on certain credit cards. The interest rate climbs to 7.65% when customers invest and buy insurance through the bank, although these products qualify for bonus interest only for 12 months.
To qualify for UOB’s maximum bonus interest rate of 7.8%, account holders need an account balance of at least S$75,000, credit a salary of above S$1,600, and spend at least S$500 a month on eligible cards. It’s important to note that this is a tiered interest rate, meaning it applies only to a fraction of one’s savings—specifically deposits between S$75,000 and S$100,000. Consequently, the effective interest rate on the One account for deposits of S$100,000 is 5% per annum.
How the Rates Compare
To illustrate, let’s consider a person with a take-home pay of S$3,000, who spends S$500 on credit cards monthly and has S$100,000 in savings. This would qualify for the maximum bonus interest rates at UOB, translating into S$5,002.50 in interest earned annually.
For example, under UOB’s structure:
Monthly account balance:
First S$30,000: 3.85% → S$1,155
Next S$30,000: 3.90% → S$1,170
Next S$15,000: 4.85% → S$727.50
Next S$25,000: 7.80% → S$1,950.00
Total: S$5,002.50
At OCBC, the same individual would earn some bonus interest after meeting salary and card spending criteria, potentially amounting to about S$3,150 per annum. If the account balance grows, qualifying for a third category could bring the interest up to approximately S$4,650.
For DBS, if this individual has eligible transactions of S$3,500 and maintains a S$50,000 account balance, they would earn about S$751.90 annually.
Additional Options for Bonus Interest
DBS also considers transactions via PayLah! for bonus interest, with rates capped at 0.55% per annum for the first S$10,000 in savings for those above 30 years old who meet a minimum spending requirement. Younger customers have fewer restrictions, allowing them to earn 0.4% per annum on the same amount without minimum income requirements.
At UOB, meeting the minimum card spend of S$500 and performing three GIRO transactions in a month can also qualify for bonus interest rates. For example, balances up to S$75,000 have seen rates increase to a range of 2.5% to 4% per annum, a significant rise compared to previous offerings.
Conclusion
As Singaporean banks adapt to changing economic conditions, these interest rate increases provide an opportunity for savers to maximize their returns. However, understanding the conditions attached to these accounts is essential to fully benefit from the rates. As always, prospective savers should evaluate their options carefully to ensure they choose the account that best meets their financial needs.
