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One of the consequences of higher inflation is an increase in interest rates. Although we have been seeing a marked increase in consumer prices for the past 9 months, Singapore banks have only started to hike interest rates of savings/checking accounts recently. UOB has recently adjusted the interest rates of its popular UOB One Account by increasing the interest rates of its S$75k to S$100k tier and giving a direct incentive to depositors for crediting their salary to the UOB One Account.
revised interest rate tiers for the uob one account (effective august 2022)
3% p.a. interest on balances above S$75,000 and up to S$100,000
The UOB One Account currently has 7 tiers that it recognizes for crediting interest. It’s in increments of S$15,000 from S$0 to S$75,000 balance and S$25k increment from there until S$100,000.
There is no change to the interest rate for balances from S$0 to S$75,000. However, there is a slight change in one of the conditions required to satisfy the interest crediting for balances above S$75,000 and up to S$100,000. More specifically, the UOB One Account now incentivizes the salary crediting component. This was an optional thing in the past, as depositors could choose between salary crediting OR making 3 GIRO transactions per month. This past option made the UOB One Account a great secondary “high interest” savings account as depositors could opt to credit their salary in a competing bank and still enjoy the interest from UOB One Account by fulfilling the credit card spend and GIRO payment requirements.
Incentive for Salary Crediting
Do note that UOB One Account’s new interest rates affect you only if you are able to keep balances above S$75,000. Assuming you do have S$100,000 to keep in such an account, is it now worth moving your salary crediting to UOB? Let’s compare:
| Monthly Interest Payout (assuming balance of S$100k) | Conditions to be Met | |
|---|---|---|
| UOB One Account | S$125 | Spend S$500 + credit salary of at least S$1,600 via GIRO |
| OCBC 360 | S$63.68 | Grow your balance by S$500 from previous month + credit salary of at least S$1,800 |
| DBS Multiplier | S$23.96 | Salary credit + credit card spend totaling at least S$5k per month |
The above table assumes a depositor with S$100,000 balance and who only does cash transactions (i.e. salary crediting, bill payment, deposit and withdrawal) without availing of home loan, insurance or investments. Under such a scenario, UOB One gives the highest interest rate with a maximum effective interest rate (EIR) of 1.50% p.a.. Do note that as of this writing, UOB and DBS have revised the interest rates for their respective products. OCBC has not done so but could do so soon to remain competitive.
Which Is the Better Account If You Don’t Have S$100k?
With all the comparisons above, it has to be said that S$100k is a pretty large sum to keep in a savings account and not everyone has that. Let’s say you have less than S$100k. Assuming a balance of S$75,000, which is the better account to keep?
| Monthly Interest Payout (assuming balance of S$75k) | Conditions to be Met | |
|---|---|---|
| UOB One Account | S$62.50 | Spend S$500 + make 3 GIRO payments |
| OCBC 360 | S$62.62 | Grow your balance by S$500 from previous month + credit salary of at least S$1,800 |
| DBS Multiplier | 22.92 | Salary credit + credit card spend totaling at least S$5k per month |
Assuming a balance of S$75,000, the OCBC 360 edges out the UOB One Account slightly even though OCBC has not adjusted its interest rates yet this round. It is worth noting though that at the S$75,000 and below mark, UOB One Account doesn’t incentive depositors to credit their salaries with them.
Again, this table does not assume any investments, insurance or home loan since there are just too many permutations to consider. That being said, there may be a sweet spot in the DBS Multiplier for depositors who trade in stocks as DBS is the only bank that counts online stock trading as a qualifier under the “Investment” category for higher interest.
In addition to the above, UOB also has a promotion until 31st December 2022 where depositors who switch over to credit their monthly salary to the UOB One Account will also get a one-time S$50 cash credit. To qualify for the promotion, depositors must NOT have previously credited their salary into UOB between September 2021 and February 2022. They also must fill out a form to register their participation.
If you do not have a UOB Account yet, you can apply here and get an additional S$50 cash credit when you deposit S$5,000 fresh funds within the account opening month. Limited to the first 200 customers per calendar month. You would also need a UOB One Card to hit the monthly card spend requirement.
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