Compare the latest interest rates across local banks in Singapore to find the best savings or fixed deposit accounts. You can even look into changes since last year, to see if they have increased or decreased. There are a number of different types of savings accounts, each offering a different interest rate. Listed below are the current interest rates on savings accounts, fixed deposits, SSBs, and other investment products.
Interest rates on savings accounts
If you’re looking to earn interest, a savings account can be the way to go. Not only do savings accounts offer good interest rates, but they also do not require you to take on huge risks or give up access to your money. There are even accounts that earn you 3.50% p.a. or more! Regardless of how long you keep your savings, you’ll likely be pleased to learn that earning interest on your money is relatively easy and requires no big investment. There are many different types of savings accounts available in Singapore, and the highest interest rates are typically the most complex. However, there are also several simpler accounts with lower requirements and risk.
Several recent changes to savings accounts have been made by banks, with some lowering the eligibility threshold to earn higher interest. OCBC has lowered the threshold to qualify for Income + 1 category and Salary category, and is the only bank to do so in this round. On the other hand, DBS is reducing the interest rate on its Multiplier Account and Income+1 category. Regardless of the reductions, all of these banks offer decent interest rates for saving money.
Interest rates on fixed deposits
Comparing the latest interest rates on fixed deposits across local bank accounts is an effective way to find out which one offers the best rates. While interest rates on promotional accounts used to require a minimum deposit of $20,000, this requirement has reduced and there are lower commitment options available. One example is the ICBC Fixed Deposit, which requires only a minimum deposit of $500. However, you should also take note of the lock-in period and minimum deposit.
While Citibank offers the highest fixed deposit interest rate in Singapore (0.70% p.a. for terms of 18 months or 12 months), it also offers the lowest rates. This is because it requires a minimum deposit of S$20,000 to avail of its promotional offer. Further, the minimum deposit amount to qualify for the 0.50% p.a. rate at OCBC is S$20,000 and it cannot be invested with SRS funds.
Interest rates on SSBs
Compared to high-yield savings accounts, SSBs offer higher interest rates and can be used as a hedge against riskier investments. Unlike high-yield savings accounts, SSBs can be redeemed in any month in multiples of $500 or up to the entire bond amount. The maturity period of SSBs is 10 years.
SSBs are backed by the government and generally mature in ten years. This means that if you’re looking to make a big investment, an SSB may be the best option. They are also more flexible, allowing investors to invest more money. SGS bonds have no maximum investment amount. Unlike SSBs, SGS bonds can’t be redeemed early. If you’re looking to get out of an investment early, you’ll need to sell them on the secondary market. In general, SSBs are more accessible to retail investors.
Changes in interest rates since last year
Three major local banks in Singapore have been cutting their interest rates several times in the last year, mainly to encourage saving and lending. While the rate cut by DBS in January may only be a temporary measure, it will help boost the local economy. In 2020, the DBS Multiplier account will be offering interest rates of 1.85 per cent – higher than the inflation rate in the last five years.
Inflation in Singapore has been moderate in recent years, with the Monetary Authority of Singapore indirectly controlling interest rates. In the past few years, the central bank had kept interest rates low, so that Singaporeans could borrow money at low rates and finance their small businesses. Eventually, the rate was expected to rise. The change in interest rates is expected to be temporary, given that the bank will have to cut lending rates again after the next inflation report.
Impact of economic slowdown on interest rates
As global inflation pressures rise, so does the need to tighten monetary policy in Asia. Singapore’s trade-dependent economy is especially vulnerable to price swings. The Monetary Authority of Singapore (MAS) manages policy through exchange rate settings. It will slightly increase its policy band rate to counter rising interest rates. It will also hold back the appreciation of the local currency against the currencies of its major trading partners.
The fixed exchange rate further aggravated the problem. The interest rate differential in ASEAN countries has traditionally been higher than global rates. This had an effect on inflows of investments and prompted the central bank to absorb this risk. Meanwhile, the cost of borrowing from offshore markets was much lower than that of obtaining the same amount of funds domestically. The weakened domestic financial system became less capable of sustaining short-term foreign indebtedness.