UOB joins OCBC, DBS in raising savings account interest rates

UOB and OCBC Bank customers will get higher interest rates on their savings accounts from Thursday, as banks fight for market share.

UOB will raise rates on its One savings account across most balance levels. The rate will go as high as 3.6 per cent for the top tier of balances - from $75,000 to $100,000 - but customers will have to spend at least $500 a month on an eligible UOB card and have their salary credited via Giro.

UOB raised the rate for that tier to 3 per cent last month under a promotion that runs until the end of the year.

There will also be increases across the board for other balance tiers when UOB card customers spend at least $500 a month and perform either three Giro payments over the same period or credit their salary via Giro.

If three Giro payments are carried out, the rates will go up to 0.75 per cent for the first $15,000 and as high as 0.9 per cent for balances from $45,000 to $60,000.

That is an increase of between 0.1 and 0.25 percentage points.

Customers who credit their salary into a UOB account can get higher rates of 1.4 per cent for the first $30,000 and 1.5 per cent for balances from $30,000 to $60,000 - an increase of between 0.7 and 0.9 percentage points.

There are no changes to rates on balances of $60,000 to $75,000, which stay at 2.5 per cent.

Ms Jacquelyn Tan, UOB's head of group personal financial services, said on Wednesday that the One account is one of the simplest and most flexible in the market, as customers do not need to invest or buy insurance but need only to fulfil one or two simple banking criteria to earn the bonus interest rate.

Meanwhile, OCBC will raise rates on its 360 savings account from Thursday. OCBC 360 customers can earn interest of up to 4.05 per cent on balances of up to $100,000.

The bank will also bring back the bonus interest category for credit card spending - account holders will earn up to 0.35 per cent more a year if they spend at least $500 a month on their OCBC 365 card.

The bank will also introduce a new tier for balances above $75,000.

DBS was the first bank to raise rates for savings accounts when it lifted the yield on its DBS Multiplier from 3 per cent to 3.5 per cent for balances from $50,000 to $100,000 early last month.

Interest rates in the United States have been hiked four times since March to combat inflation.

Mortgage rates here have climbed in response to between 2.75 per cent and 3.08 per cent.

Savings rates are now also moving up as banks compete for market share, said Ms Chuin Ting Weber, chief executive and chief investment officer of MoneyOwl.

Ms Weber noted that customers usually have to do something that is revenue-generating for the banks, such as buying insurance or investment products, if they want to access the higher rates.

She does not recommend that customers go looking for the most attractive savings rates because any incremental increase is just so small, noting that they could end up buying an unsuitable product and lose more in fees and commissions than would be gained from a higher interest rate.

She said people should just put their money in the bank where they have one major activity. In her case, her mortgage is with DBS, so she uses only the DBS Multiplier savings account.

Mr Tan Chin Yu, senior client adviser at Providend, said: "Most of my credit cards, my home loan, everything is with one bank - it is more of a hassle-free preference."