Local banks cut interest rates on savings accounts amid Covid-19 outbreak

DBS, UOB and OCBC ATMs at the Singapore Institute of Management on March 12, 2020. PHOTO: ST FILE

SINGAPORE - Local banks have cut their interest rates on savings accounts amid the coronavirus outbreak this year, with OCBC Bank being the first to announce another reduction since May.

OCBC said on its website on Monday (June 1) that it will reduce the salary credit bonus interest for customers on the OCBC 360 savings account from July 1, amid a weakened interest rate environment and a challenging macro climate.

For balances up to $35,000, the salary credit bonus interest will be halved to 0.6 per cent, down from the current 1.2 per cent.

Balances between $35,000 and $70,000 will earn 1.2 per cent interest, down from 2.4 per cent.

The base interest is calculated at the end of each day, based on the daily balance and credited to the 360 account at the end of the month.

The bank will also stop offering the credit card spend bonus interest - currently at 0.2 per cent for the first $35,000 and 0.4 per cent for the next $35,000 - on the 360 account from July 1.

"Unfortunately, the interest rate has declined steeply since March 2020," the lender said.

"While we had hoped to continue offering our customers the best proposition possible, the current low interest rate has made it impossible to do so. We will continue to monitor the interest rate environment and improve our product offerings once it is viable to do so."

This latest announcement comes about a month after an earlier set of rate revisions for the 360 account took effect on May 2.

DBS Bank and United Overseas Bank (UOB) had introduced cuts to their interest rates that kicked in last month as well.

Since May 1, DBS Multiplier account holders get up to 2 per cent per annum on the first $25,000 they have with the bank, down from 2.08 per cent, when they credit their salaries and spend $2,000 or more in one category of spending such as credit card, investments and mortgages.

Its interest rate of 0.05 per cent per annum remains unchanged for those who credit their salaries into the accounts and have less than $2,000 in eligible transactions.

UOB One account holders will receive 0.5 per cent per annum if they spend at least $500 on eligible cards in one calendar month on their first $15,000, down from 1.5 per cent.

Those who meet the $500 card spend and credit their salary or have at least three Giro debit transactions will get 1.25 per cent per annum, down from 1.85 per cent.

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