Local banks race to raise interest rates on savings accounts

IN THE span of 2 days, OCBC and UOB both raised the interest rates of their savings accounts in a bid to stay competitive amid a rising rate environment.

On Wednesday (Aug 31), UOB announced that it will raise the interest rates of its One account from Thursday, with the maximum rate rising to 3.6 per cent, up from the promotional rate of 3 per cent which came into effect on Aug 1.

To earn the maximum rate on the first S$100,000 of their bank balance, customers will need to credit at least S$1,600 in salary to their account and spend a minimum of S$500 on select credit and debit cards.

A day earlier, OCBC announced that it would raise interest rates on its 360 savings account from Thursday. Customers will be able to earn interest of up to 4.05 per cent a year on balances of up to S$100,000, up from the maximum of 2.38 per cent a year on balances of up to S$75,000.

In addition, the lender reinstated the “spend” bonus interest category, giving customers an additional 0.35 per cent a year of bonus interest for spending S$500 with their OCBC 365 credit card.

Customers who wish to earn the 4.05 per cent interest rate on the first S$100,000 in their accounts will need to credit at least S$1,800 in salary through Giro, save at least S$500 a month, charge at least S$500 to their OCBC 365 credit card each month, insure themselves with OCBC and invest with OCBC.

DBS had raised rates for its Multiplier account to a maximum of 3.5 per cent on Aug 1, up from 3 per cent previously, for bank balances of between S$50,000 and S$100,000.

DBS Singapore’s consumer banking group head Jeremy Soo said: “We are continually reviewing our suite of initiatives and product offerings to help our customers to better withstand the inflationary environment across various aspects of their lives.”

DBS analyst Lim Rui Wen said that as interest rates continue to rise, depositors have other options to park their funds, such as Singapore Savings Bonds and fixed deposits.

“We expect the local banks to continue to maintain their market presence via their flagship salary accounts as these accounts serve as good source of CASA (current account and savings account) to the banks’ deposit base.

“As banks continue to raise their interest rates, we do expect overall cost of deposits to go up,” she said.

Shares of DBS closed down 0.9 per cent or S$0.28 at S$32.60; UOB closed up 0.04 per cent or S$0.01 at S$27.33; and OCBC closed down 0.1 per cent or S$0.01 at S$12.09 on Wednesday.