UOB cutting One savings account rates; DBS, OCBC staying put for now on similar products

UOB is introducing lower interest rates for its One savings account members ahead of anticipated rate cuts by the US Federal Reserve.

In a Monday (Apr 1) letter addressed to its One Account customers seen by The Business Times, the bank cited a need to “align with long-term interest rate environment expectations”.

The reduced interest rates will come into effect on May 1, and are applicable to all new and existing UOB One accounts.

They will apply to account balances between S$30,000 and S$100,000, and when customers spend at least S$500 a month on an eligible UOB card and credit their salary of over S$1,600 via Giro.

In all, the revised tiered bonus interest rates will range from 3 to 4.5 per cent, as opposed to the current 3.85 to 7.8 per cent for customers who meet all the above criteria.

They will now stand to earn a lower maximum bonus 3 per cent interest per annum on the first S$30,000 balance in their account, versus 3.85 per cent currently.

The revised 3 per cent interest rate ceiling also applies to the next S$30,000, down from the current 3.9 per cent, and the subsequent S$15,000, which is presently pegged to 4.85 per cent. 

A maximum 4.5 per cent rate will be applicable for the next S$25,000. This is markedly lower than the current 7.8 per cent earnable.

UOB, however, introduced two tiered bonus interest rates on top of the existing base rate of 0.05 per cent. 

For the next S$25,000 after the S$100,000 balance mark, UOB One account holders will now earn a 4.5 per cent interest and another 6 per cent for the subsequent S$25,000.

This will allow customers to earn higher interest in total, said the bank.

The new balance tiers work out to a maximum effective interest of between 3.37 and 4 per cent per annum for deposits of S$100,000 to S$150,000.

“With these changes, you can now earn up to S$6,000 total interest in a year for deposits of S$150,000 when you spend a minimum of S$500 on eligible UOB cards and credit your salary via Giro/PayNow each calendar month.”

UOB in late 2022 raised its interest rates on the flagship savings account, following similar moves by its rivals DBS and OCBC.

Its revised interest rates at the time, capped at 7.8 per cent, offered the highest maximum bonus interest rates among the three local lenders.

UOB noted that even after the rate revisions come into effect next month, One account holders will “continue to enjoy competitive interest rates with the least requirements in the market”.

“This interest earned, coupled with the cashback and exclusive privileges that UOB One credit and debit cardholders enjoy, makes the UOB One Account the top pick for the value hunter,” said a UOB spokesperson in an e-mailed statement to BT.

Currently, DBS offers a maximum rate of 4.1 per cent on the DBS Multiplier account, while OCBC offers up to 7.65 per cent on the OCBC 360 account.

The two banks have yet to indicate any changes to these accounts.

“We regularly review our product offerings – including promotional and product interest rates – to align them with the competitive landscape and market conditions,” said Tan Siew Lee, head of group wealth management at OCBC.

Meanwhile, Brandon Lam, head of deposits and financing solutions at DBS’ consumer banking group, said the bank continues to “prioritise providing the most inclusive and broad-based deposits and savings solutions” amid sticky inflation and an elevated cost of living.

Since DBS enhanced its Multiplier account in August 2023 to enable more people to enjoy bonus interest, the bank has recorded 20 per cent more sign-ups among gig workers, tertiary students and national servicemen, he said.

Last week, Chicago Fed president Austan Goolsbee said he pencilled in three rate cuts for 2024, in line with the median estimate for interest rate reductions that policymakers projected for the year.

At the last policy meeting, the US central bank kept its benchmark overnight lending rate in a target range of 5.25 to 5.5 per cent.