I have blogged about the importance of having a war chest or a few (i.e. money in the bank, SRS, CPF-OA and CPF-SA). I also blogged about how I have a preference to put most of my money in the bank in fixed deposits for higher interest income.
Of course with fixed deposits, there is a lock up period but if we should need the money, breaking a fixed deposit simply means forfeiting the higher interest income and nothing else. So, try to have several fixed deposits instead of putting all our money in a single fixed deposit and try to go for shorter lock up periods.
We want to keep a good percentage of our money in the bank liquid enough to react quickly to opportunities. Unfortunately, with interest rates in local savings accounts around 0.05% to 0.1% per annum, we have to pay a pretty steep price for having liquidity. As I have a relationship with UOB, I am paid 0.2% interest per annum for money in my savings account. Yah. Big, fat, hairy deal, right?
Although some have told me about other banks like OCBC offering up to 3.05% per annum in interest on savings (up to a maximum of $50,000 deposited in the OCBC 360 account), I have been slow to act because of the various conditions which look complicated to me and I am a simple (or, some might say, lazy) person. Conditions? Must go online to make 3 bill payments a month and must charge $400 worth of purchases to a credit card issued by OCBC per month, for examples.
|Taken from OCBC's ad.|
3.05%? Sounds good, doesn't it?
Well, to be fair, why shouldn't OCBC have conditions which have to be fulfilled if they are paying us so much more? Even if we met only 2 out of the 3 conditions, it would mean getting 2.05% interest per annum and for $50,000, that would be a nice $1,025 a year in interest income. Good enough for a short holiday. OK, lazy, er, I mean simple AK, put this is on your "to do" list.
Also, recently, I opened a savings account with CIMB because they are offering 0.5% per annum in interest and 0.8% per annum if I were to deposit $500 in the account every month. No minimum spending required. No payment online required.
To save me the trouble of depositing $500 each month, I could even give them a lump sum upfront which I did and they would treat it as monthly deposits in advance. I get an ATM card and a free cheque book too. I am still very old school and believe that a cheque book represents convenience.
Like OCBC, there is a cap on which the higher interest rate would apply. In OCBC's case, it is $50,000. In CIMB's case, it is $750,000. Wow! I don't have that much liquidity. So, it doesn't matter to me but I know where I should be squirrelling my excess liquidity now.
An interest rate of 0.8% per annum is 4x more than what UOB is paying me. Sheesh. Why should I not consider parking more money in CIMB from now on (after parking $50,000 in OCBC 360, that is)? OK, need to visit OCBC soon.
If you should be interested, here are the links:
CIMB Star Saver Account
OCBC 360 Account
In case you are wondering, this is not an advertorial. Just talking to myself, as usual.
1. A foreign chest for emergency funds.
2. A special chest for emergency funds.
3. Why fixed deposits over structured deposits?
4. $350,000 gets peanuts? Upsize the peanuts!
5. If we want peace, be prepared for war!