Open New Savings Account with 3.55% Interest Rates

[Updates 31Oct16] For BoC Smartsaver, they have revised their T&C:
As of 1Dec16:
1) Card Spend Bonus: (previously 1.55%)
     - Above $500 to enjoy 0.8% interest
     - Above $1500 to enjoy 1.6% interest
2) Salary Crediting Bonus: (previously 1.00%)

     - Above $2,000 to enjoy 0.8% interest

     - Above $6,000 to enjoy 1.2% interest

3) Payment Bonus Interest: (previously 0.6%)

     - Above 3 bills to enjoy 0.35% interest
Since BoC has upped the requirement, it's no longer worth it. Based on normal salary of $2,000 and expenses of $500, the interest is only 1.95%.
Unless your salary is above $6,000 AND your monthly expenses is above $1,500, then you will get 3.15%.

WHOptimized:
If you are employed full time with a take home pay of >$2,000, opt for OCBC 360 Account. Else open UOB One Account instead.

----------  End for: Updates 31Oct16  ----------


Do you notice that your savings account is giving you less than $1 of interest per month? Or some even less than $10 per year.

Well, this is because normal Savings Account interest rates is just 0.05% per year.

It's "0.05%", not even 0.5%. It's 20x lower than 1%.
It's "per year" and not per month. It's about 0.004% per month. Yup, it's 250x lower than 1%.

Do you know that you can earn up to 71x of your Savings Account interest rate? This means that if you are currently seeing your monthly interest rate of $1 in your monthly statement, you can increase it to $71 per month! Risk free!

Let us introduce to you to these 3 Savings Account:

1) Bank of China (BoC) Smartsaver
(with interest rate from 3.40%~3.55%)
The interest rate given depends on the total balance of your account for the specific month.

2) OCBC 360 Account
(with interest rate of 2.25%)
Though the total is up to 4.2%, but we feel that 2.25% is more practical as the additional 1% interest for investment is hard to achieve, unless you have existing investment or insurance with OCBC.
And the other 1% is on incremental balance only and not on the entire balance. So can treat it as just an "additional bonus" but not a fix bonus.

3) UOB One Account
(with interest rate from 1.55%~2.43%)
Though it shows up to 3.33% the actual total is only up to 2.43% as the interest earned is based on incremental balance.
Having the least interest, it's still good for those whose take home pay is less than $2,000 per month. The interest rate is still 51x higher than your normal Savings Account interest.

Below is the summary of the interest rate earned for the 3 banks above as well as our normal Savings account and Fixed Deposit interest rates for 1 year:

As the interest rates fluctuates depending on the total amount you have in your account, below is the actual interest earned per year based on the respective balance:

So if you have $1000 in your normal savings account, you will just earn a pathetic 50cents a year! That is about 4cents a month!
If you have BoC Smartsaver, you can earn $34 per year or $2.80 per month.



Hope these interest rate excites you. Though it's risk free, but we need to do these 3 simple steps to enjoy this rates to the fullest:
1) First, simple job. After opening the new account, just update your new account details to your HR/Payroll department.

2) Second, simple job. Arrange 3 giro payments. It can be to your mobile phone bills, utilities bill, credit cards payment, etc.
If still less than 3, let us know and we can advise other alternatives.

3) Third, simple~tough "abit" job. Spend $500 per month on any of the credit cards from the bank. If your monthly expenses is less than $500, you can always shift all your giro payment like your mobile phone bills, utilities bill, etc to your credit card.
If still insufficient, let us know and we can advise other methods.

WHOptimized:
So how do you decide which account to open?
Just follow the simple flowchart below:

And remember about "Compound Interest"? If not click here. The additional interest you earn, will further earn more interest for you.

Compound Interest

What is "Compound Interest"?
Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. Compound interest can be thought of as "interest on interest" and will make a deposit or loan grow at a faster rate than simple interest, which is interest calculated only on the principal amount.
[Source: Investopedia]

For simple interest, if you put in $100 with 6% annual interest, by end of Year 1, you would get $106; end of Year 2, you will get $112; end of Year 3, you will get $118.
Every year you get $6 interest.

For compound interest, if you put in $100 with 6% annual interest, by end of Year 1, you would get $106 (same as normal interest); end of Year 2, you will get $112.36; end of Year 3, you will get $119.10.
If you notice, by end of Year 2, you will get extra $0.36 and by end of Year 3 you will get an extra $1.10 compared with normal interest. This is what compounding is, where your interest earned also earn interest for you (e.g. additional 6% on the Year 1's $6 earned interest). 

Though the difference is not that great for the first few years, but by end of Year 9, you will notice the difference is getting bigger, to be precise 9.7% more. Populated below is the difference of the interest earned between normal interest (in blue) against compound interest (in orange) based on 6% interest:

As you can see that the orange line (which represents the compounding interest) starts to move exponentially as the time goes. Whereas the blue line (normal interest) just goes up in a line.

This is what happen when you leave your interest gained to be reinvested again making the interest that you earned to earned further interest.

This is the power of compounding interest and as quoted by Albert Einstein:
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."

About the last few words: "he who doesn't ... pays it." What it meant is that it's also applicable for loans or credit that you borrow. E.g. if you just pay the minimum amount of your credit card bill, your loan amount will be like the orange line above where it'll grow and skewed upwards.

Just to add:

• For Simple Interest, it takes 17 years to double your money at 6% interest, but Compound Interest takes only 12 years. It saves you 5 years!
• By end of Year 21, the interest gained from Compound Interest is 50% more than Simple Interest
• Just add another 9 years, by end of Year 30, the interest gained by Compound Interest is 100% more! That is double the total interest earned by Simple Interest

WHOptimized:

• Leave your interest and let it grow instead of withdrawing the interest earned to spend
• The longer you leave it, the faster it'll grow not diagonally but exponentially as you can see in the graph
• This is how it looks like if you put just $100 from age 20, by the time you retire at 65, you will get $1842 in Compounding Interest instead of just $400 for Simple Interest