Things are finally looking up for savers with cash in deposit accounts as competition heats up among financial institutions amid a fast-changing interest rate environment.
After years of stingy returns, the wheel is starting to turn in favour of depositors - promotional rates from local banks are at around 1.6 per cent annually, while some foreign ones are dangling returns of up to 1.9 per cent.
Fixed deposit rates typically follow the Singapore interbank offered rate (Sibor), which has risen to 1.3375 per cent from 0.45 per cent at the end of last year, in preparation for a rate hike in the United States that finally came earlier this month.
"With (US) rates rising, banks here have to offer competitive rates to incentivise people to retain their funds here, rather than parking their money outside of Singapore," MoneySmart chief executive Vinod Nair said.
SingCapital chief executive Alfred Chia added: "When Sibor rises, it becomes more costly for banks to acquire funds via interbank borrowing. The launch of Singapore Savings Bonds by the Government in October is also a challenge for the banks. So now, they have to fight more actively to secure deposits as a source of funding."
Against this backdrop, DBS recently revised its fixed deposit rate for the three- to five-month tenor from 0.1 per cent annually to 0.15 per cent, effective from Dec 23. The rate for 24 months rose from 0.55 per cent to 1 per cent.
While OCBC's regular rates - or board rates - have not changed, the promotional rate of 1.65 per cent for the 12-month tenor is "one of our best offered", a spokesman said.
This is closely followed by UOB's promotional rate of 1.6 per cent for 13 months, which the bank beefed up from 1.1 per cent in January. Both promotional rates require a minimum deposit of $20,000.
Some foreign banks and institutions are tabling even better offers in an effort to build market share against the local banks' advantage of having a much larger deposit base.
Hong Leong Finance recently generated some buzz with its market-beating rates.
Its lowest rate stands at 1.86 per cent for the 13-month tenor and the highest at 1.99 per cent for the 18-month tenor. For the latter rate, there is a minium deposit of $200,000.
Maybank is offering a 1.9 per cent rate for the 24-month tenor, with the low end at 1.6 per cent for three months. The minimum deposit is $25,000.
SingCapital's Mr Chia said: "While the rates vary throughout the year, it's safe to say that banks in Singapore are offering their highest fixed deposit rates in 2015 now.
"The rising interest rate environment may be an issue for borrowers, but it's a good time for people who wish to save to be on a lookout, as long as the tenor and minimum saving requirements are not an issue."