Nah, you don’t have to jump through hoops in order to get that interest rate.
But the bank might possibly be luring you with offers of that 7.85%, and you might quickly realise that it’s not that easy to get that amount.
|Bank||Interest rate (and conditions)||Who is it realistic for?|
|Standard Chartered Bonus Saver||Reportedly 7.88%, but more realistically 2.5% if you do credit your salary||High spenders
Those who will buy a unit trust of more than $30,000
You need to pay a minimum insurance premium of $12,000 (CRAZY!)
|UOB One||Reportedly 7.8%, but more realistically 2.5% when you spend minimum of $500 and also have 3 bills to pay||For those who’ve lots of money parked in cash (like more than $30k worth)|
|OCBC 360||Reportedly 4.65%, but more like 3.8%, if you spend $500 per month on their cards and if you raise your average daily balance by $500 monthly||You raise your monthly savings by $500 each month, which is a real stretch, considering that cash is a much lower-yielding asset than others like stocks|
|DBS Multiplier||Reportedly 4.1%, but more like 1.8%|
|Maribank (our recommendation)||2.88%, with no frills|
|GXS||2.68% in the savings pocket|
|Trust||2.5% if you’re a Union member or 2% if you’re not|
DBS Multiplier, which is realistic, but not high
The DBS Multiplier is probably what everyone is more familiar with.
Kudos to them, it’s very easy to understand, based on the quantum of the eligible transactions.
But that also means that you might really only get 1.8% per month.
OCBC, only if you like saving $500 monthly
Again, these amounts to spend on their unit trusts doesn’t make much sense for the median salaried worker.
SC Bonus Saver – Unrealistic
Just look at the amounts you need to spend on their investment products to qualify.
It simply makes no sense to be spending $30,000 on their investment products, so you could have the 1.5% bump on your interest rate.
UOB One – High minimum starting balance required
Nah forget it, UOB.
You might realistic have $30,000, but anything more than that is a really high bar to reach.
Unless of course, you own UOB, like Wee Cho Yaw.
Here’s what we personally tried and think is better.
Our recommendation – Maribank
We recommend this because of how easy it is to get the interest, without any hoops to jump through.
Whilst the interface is simple, and you really can’t do much banking through their ‘bank’ beyond transferring money in and out of the account, using this as a basic reserves account can be quite helpful.
But a short note though, several times we have faced significant lag times logging in. We’re not sure if this happens for others but expect to wait upwards of 6 seconds just to get into your account each time.
GXS – minor inconveniences with the savings pocket
Amongst all the 3 new digital only banks in Singapore, GXS is by far the one with the best interface.
Amongst all the banks, we’ve also noticed that this is the fastest to log in, taking an average of less than 2.2 seconds, compared to the average of 4 seconds for banks like DBS, UOB, or even Trust.
It is styled a delicious looking black, and you immediately know how to access functions such as:
- Transfer in,
- Transfer out
- PayNow etc.
I can’t say this is the same as banks such as Trust, where critical functions are often hidden behind tiles that no one really associates with the function.
But it can be mildly inconvenient to move the money into the savings pocket, so you can max out the 2.68% interest rate.
But what’s even better is how they offer a daily credited interest rate, which is the only one amongst the banks in Singapore.
Our pet peeve with Trust is this.
It might not be the most natural interface to interact with. When you first log in, you would immediately see your credit card balance.
Whilst that’s definitely shocking to see, for all those people who have buyers’ remorse, you would know the more common reason why you’re even opening your bank account.
It’s to make a transfer, or to check if you have gotten your money.
Try guessing how to make a transfer.
You actually have to scroll to the savings account, and then click on ‘Send Money’ before you can actually send the money across.
Again, it will take some getting used to.
If you’re an NTUC Union member, you will get a 2.5% interest rate. If you’re not, you’re stuck with the 2%.
You get the bonus 0.5 to 1% if you make more than 5 debit/credit card transactions each month.
Principles on interest rates
Now that you’ve known the banks we personally use and recommend, let’s share some principles behind our thinking around interest rates.
Cash yield is not ideal
Whilst the 2% yield might sound sexy and appealing, it’s not really the best yielding asset class across time.
That’s why we often recommend that a far better way is to look at equities that allow you a far higher return, rather than sticking rigidly to the interest rate offered by banks.
$500 is not that easy to spend
When I look at my monthly average as a single adult, it hasn’t hit $500 for the past 2 years. Maybe it’s because I still eat tuna.
The point isn’t that my breath stinks of tuna, but the point is that it’s really not that easy to spend that amount.
And trying to hit it just so that you can get a few more percentage points on that interest, just doesn’t make much sense.
Don’t try to spend, just to get more interest.
Does it even make sense?
Use the interest rates for your reserves
Ideally, you would be using the interest rates to grow your reserves, which we recommend to be somewhere between 3 to 6 months of your living expenses.
That way, you don’t have to worry about your reserves rotting and losing real purchasing power with the impact of inflation.
Stop chasing the interest rate, make more money instead
But of course, the ultimate recommendation is that you learn skills that allow you to make more money instead.
Think of yourself, as the money making machine. Each day, you should be figuring out how you can better earn more money, so that you can eventually come to the point where you’re not worried about the pennies you earn from a 2% difference in interest rates, but rather, that you see an exponential change in your earnings.
That’s far better.