Singapore Watch

Have some extra cash around? If you are saving for a rainy day, how about opening a high(er) interest bank account and letting your money grow even more?

Currently in Singapore, a few banks are offering accounts with higher savings. Most of them are able to do so, as these accounts are online bank accounts, and thus do not offer over-the-counter services. This means that you have to transfer funds through online banking. However, some of these banks do offer ATM Cards.

But first of all, let’s take a quick peek at the interest rates offered:

UOB High Yield Account (link)

If you had a million dollars, this account currently offers the highest interest rate of 2% 1.60% 1.2% p.a. Other than that, it’s interest rates are not as attractive as the others listed below.

UOB currently gives the highest interest rates for amounts less than $5k. Apart from that, it’s other interest rates are not very attractive compared to others.

As of March 16, UOB High Yield is really not even worth any consideration, as all other banks offer more attractive interest rates.

Maybank iSAVvy (link)

iSAVvy is a good bank account to have if you have between $5k-$50k. It’s interest rate of 1.68% 1.08% is the highest in the market for this amount range.

iSAVvy is revising their rates from April 4th. They dropped their interest rates from 1.08% to 0.88% to 0.5% for balances between $5k-$50k, and 1.28% to 1.18% to 0.75% for deposits balances $50k-$1mil.

iSAVvy upped their interest rates from Oct 20th. For balances between $5k-$50k, interest is back up to 1.08%, and for deposits balances $50k-$1mil, its now 1.38% They do provide an ATM card to allow for easy withdrawal of funds when you need them.

NTUC Fairprice Plus (link)

The Fairpriceplus is by far my personal favourite. If you currently have trouble maintaining the $500 limit most bank accounts required, and do not need to write checks, this account would be suitable for you.

- Requires no minimum balance
- ATM linked to a Debit/Credit card provided
- Cheque deposit box available for depositing pay cheques
- 0.5%/1.0% interest on balance
- Earn Linkpoints at NTUC and various merchants
- No counter services available

Banking services for Fairpriceplus is provided via OCBC.

Do note that Fairpriceplus will be dropping its interest rate to 0.5% for balances below $50k, as of March 2009. However, they still offer the highest interest rates in all categories.

Standard Chartered e$aver (link)

Standard Chartered was the first bank in Singapore to offer the concept of the high interest savings account. The reason they are able to do that is because it is a no-frills bank account. This means that counter services are not available, and since no ATM card is issued, this bank account is solely virtual, and requires no minimum balance. However, transferring your funds to and from this account is simple, as you can link it to your current bank account.

- Requires no minimum balance
- NO ATM card/passbook/cheques
- Only accessible if linked to another bank account

Standard Chartered use to offer the highest interest rates. It has since undergone several rates revision, and with it’s latest revision, it’s interest rate of 1.2% has been reduced to 0.8% 0.78% 0.5% 0.4% for amounts below $5k.

e$avers used to be my preferred account for savings, but with the revision, it makes more sense to hold a Fairpriceplus account instead, since it offers 1% and has a higher interest rate and all the necessities of functioning as a primary bank account.

Note that e$avers does have a Bonus Rate of 2.00% promo for accounts opened by end of march, but bonus interest is for a limited period only.

Which bank account do you have?
** Figures have been updated to reflect change in bank interest rates. (26Mar08)
** Figures have been updated to reflect change in bank interest rates. (12Feb08)
** Figures have been updated to reflect change in bank interest rates. (4Feb08)
** Figures have been updated to reflect change in bank interest rates. (24Jul08)
** Figures have been updated to reflect change in bank interest rates. (4Aug08)
** Figures have been updated to reflect change in bank interest rates. (20Oct08)
** Figures have been updated to reflect change in bank interest rates. (12Feb09)
** Figures have been updated to reflect change in bank interest rates. (16Feb09)

Check out The Banks’ Historical Interest Rates to see how interest rates have changed through the months.

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20th October 2008
Monthly Savings Plan

It seems from the comments below, that some readers are more interested in Monthly Savings Plans, and how their interest rates fair. OCBC and POSB both have such plans.

Here are their rates:

For the moment, OCBC Monthly Savings Plans are the way to go. But if you are a POSB customer and prefer to keep it all with one bank, 0.45% is still higher than the conventional bank interest rate.

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20th October 2008
Fixed Deposit “war”

With the stock market swinging more down than up recently, and banks having liquidity, people are finding safer havens for their money, and banks are looking to get more people to put money with them. Thus, the “Fixed Deposit war”. Banks have been offering higher than normal FD interests for periods as short as 3 months.

If you do not mind locking your money up for some time in return for much higher returns compared to the above mentioned stuff, check out the current fixed deposit rates at various banks, and see if there’s one that fits your tastes. Whatever you do, please do read the fine print.

Check out this blog* which tracks current promotions pertaining to Fixed Deposits.

*disclaimer: singapore watch is not related to singapore fixed deposits blog, and will not be held responsible for any content on their site.

Since I started tracking bank interest rates in January last year in the post “Earn up to 2% 1.6% 1.2% 1.38% p.a. in a Savings Account“, bank interest rates have slowly been sliding downwards.

I thought it would be interesting to be able to see on one page, how high interest rates were previously, and which banks change their interest rates the most often:

16 March 2009:

Standchart’s e$aver dropped interest rates for $50k and above.
(note that e$avers has a special Bonus Rate of 2.00% promo for limited period.)
UOB dropped their interest rates for all categories.

16 February 2009:

Maybank iSavvy dropped their interest rates for $5k-$50k, and above $50k.

12 February 2009:

Fairpriceplus dropped their interest rates for less than $50k.

20th October 2008:

Standchart’s e$aver dropped interest rates for all categories.

4th August 2008:

Standchart’s e$aver dropped interest rates for all categories.

25th July 2008:

UOB High Yield dropped interest rates for all categories except from $500k-$1mil.
Standchart’s e$aver dropped interest rates for all categories.

4th April 2008:

UOB High Yield dropped interest rates for all categories.
Maybank iSavvy dropped their interest rates for $5k-$50k, and above $50k.

30th Jan 2008:

I have gotten unsolicited calls from telemarketers before, offering me loans or asking me to sign up for credit cards. I’ve found the fastest way to end the call is to tell them “sorry, I don’t have the required minimum income“, and most of the time, they are more eager than me to hang up the phone.

Of course not all these offers are bad. I’ve friends who after deciding to end their relationship with credit card debt once and for all, by taking these loans at a lower but fixed interest rates (or 0% with a processing fee), and clearing their credit card balance. They have been faithfully paying off the required monthly balance since, and I bet it’s a relieve to see the debt finally shrinking.

Solicitations are good or bad depending on whether you want/need what they are selling or not. Whatever the case, always read the fine print before signing on the dotted line.

Spender Beware!

Another thing that caught my eye was the writer mentioned that the annual income minimum for credit cards has been lowered to $24,000. I haven’t read anything about that so far. Is that a misprint?

Letter from Chin Kee Thou

I READ with interest the report “Income checks: Onus on banks or borrowers” (March 10).

Banks are profit-oriented entities, and like any other businesses are only interested in pushing their products and services by extending loans, encouraging credit card usage and signing up new cardholders, even in an economic downturn.

Recently, the Monetary Authority of Singapore lowered the annual income limit to qualify for a credit card to $24,000 per annum - it was originally $30,000 - to be eligible for unsecured borrowing, subject to a limit of two months’ salary.

I have been an ordinary credit cardholder since 1981, and many times over the years, even in difficult economic times, the issuing bank has offered unsolicited loans.

Whenever I make a big purchase item with my card, aletter soon follows asking if I want to transfer the amount to a loan without checking my payment pattern - and I always pay up in full, on time. It feels like an insult.

A year ago, my credit card, with a limit which is more than adequate for my needs, was unilaterally upgraded to a platinum status without checking on my income status. I turned down the upgrade. My employment and income status had changed - I was by now a retiree. A platinum card required a high annual income and also attracted higher subscription fees.

Last year, I was offered another unsolicited loan by the bank, which offered a free watch if I were to bank in a cheque for $6,000 at “0 per cent” interest for the first six months. But the fine print revealed that there would be a “processing fee” of 5 per cent. Following the six-month holiday, interest at the prevailing rate of 24 per cent per annum would apply. I have related this episode in “Beware the credit card ‘debt trap’” (Nov 19).

Banks have no moral responsibility in pushing their products and services in a sensible manner which would curtail overspending. That would make no sense for the banks as businesses.

In the words of Ms Ong Ai Boon, director of the Association of Banks in Singapore (”Consumers make the final choice”, Nov 27): “Credit cards are widely-used products that banks will market. Ultimately, the consumer must consider his financial position and decide on whether he requires a credit facility or a credit card”.

The doctrine of caveat emptor applies. Consumers should be responsible for their financial affairs and live within their income limits. Be disciplined and resist overspending, especially during these hard times, or you will be placing a noose around your own neck.

A Brief History of Credit Cards

In the 1950s, only people with excellent credit (like successful businessmen) could get a Diners or Amex card (the pioneers of credit cards). Because of this, credit cards were a status symbol, a prestige - if you had one, you were cool!

The initial credit card model was that companies made their money from membership fees and sales commissions, and got mad if you didn’t pay off your bill each month.

Then in the 1960s, banks jumped in and starting offering credit cards too. By the end of the decade, almost every bank were issuing charge cards. However, their business model was different - they generated most of their revenue from interest charges and late charges. In short, they aren’t interested in getting you to pay off your bill in full each month, as they earn more the longer you take to pay your bill off.

Did you know?

Banks love for you to carry a balance. In fact, minimum payments have been lowered, incentives were offered, grace periods were lowered, annual fees can be waived. Although credit cards are one of the 5 ‘C’s, these days, anyone can own a platinum card.

If you have a $12,000 credit card debt, never charge a single dime to the card after, and only pay the minimum due, it would take 400 monthly payments (33 years and 4 months) to pay off everything.

At an interest of 18% pa, it would cost you a total of $29,616 to pay off the $12,000 you charged to the card!

The Simple Rules

1) There is a difference between good debt, and bad debt. The only time borrowing makes sense is when you do it to buy something that can go up in value, like a house.

2) Treat your credit card like cash/nets. If you don’t have the cash or money in the bank, don’t charge it.

3) Use the bank. Don’t let them use you. The only reason you should have a credit card is to earn points or get cash-backs and discounts, and not treat it as a loan for money you don’t have. I love credit cards that are tied to a bank account. What I do is charge it for the points/cash-back, then pay it off at whenever I log on to internet-banking.

* summarized from “Start Late Finish Rich” by David Bach, Chapter 4.
Book borrowed courtesy of the National Library.

George Soros thinks our current financial situation is more severe than the Great Depression, and similar to the demise of the Soviet Union. Well that’s certainly not good news. I’m a lay person. I haven’t the slightest clue how they made the financial system so complicated.

We’re having a credit crisis, which means credit is tight, because banks have gaping holes in their balance sheets, and dare not lend out anymore money, or can’t, because they are over-leveraged. The bailout is meant to ’solve’ this problem. But I think the hole is too big to be covered with even bailout money, and credit is still going to be tight. So why doesn’t the government give credit directly to borrowers through another agency? If they do so, they still have chance of getting their money back, with interest!

This question was brought up in Singapore before, and the answer given was that Governments aren’t set up to assess individuals for loans, and that banks had a better set up for that. Uh … yeah, which is why banks are need bailouts now, cause they know what they are doing.

It seems to be like a global game of ‘hot potatoes’. The US government is dishing out billions of dollars that they don’t have. Me thinks that at the end of the day, countries (like China) who bought US treasuries will end up stuck with the ‘hot potatoes’, which have no value.

Now if only there were a RESET button … …

Soros sees no bottom for world financial “collapse”

NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

“We witnessed the collapse of the financial system,” Soros said at a Columbia University dinner. “It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

“I don’t remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,” Volcker said.

(Reporting by Pedro Nicolaci da Costa and Juan Lagorio; Editing by Gary Hill)