United Overseas Bank (UOB) is offering a new savings account that will reward customers with a bonus interest when they save.
The UOB Stash Account, which is being launched today, will allow customers who maintain or increase their monthly average balance above $10,000 to access a higher interest earn rate.
Here is how it works: The first $10,000 deposited into the account will be pegged to a base interest rate of 0.05 per cent a year. There will be no bonus interest.
But the next $40,000 that is deposited will come with a bonus interest of 0.75 per cent a year, bringing total interest to 0.8 per cent.
For the $50,000 after that, bonus interest will be 0.95 per cent and total interest will be 1 per cent.
The base interest is calculated based on each day-end balance in the UOB Stash Account, and the bonus interest is calculated based on the monthly average balance.
This means that a customer who deposits $20,000, for example, can earn total interest of $85 at the end of 12 months - eight times the interest earned through a basic savings account, which pays about 0.05 per cent a year.
Account balances above $100,000 will be subject to only a base interest of 0.05 per cent.
UOB said in a statement today that while Singaporeans may be habitual savers - research from global data company Nielsen shows that nearly 70 per cent of people here save regularly - they may not be making the most of the money that they are stashing away.
A recent UOB survey found that even though 52 per cent of respondents say that interest rates were an important part of choosing a savings account, 63 per cent were not aware of how much interest they were earning on their savings.
In addition, 80 per cent said they need at least two bank accounts to manage their savings from their spending and be in better control of their money.
The survey, which was conducted from September to October last year, polled 328 people in Singapore aged 18 to 50.
Ms Jacquelyn Tan, head of Personal Financial Services Singapore at UOB, said the bank aims to grow the number of UOB Stash Accounts to 250,000 by 2020.
She noted that the UOB Stash Account will work for customers who want to squirrel away their savings into a dedicated account.
"Our survey also showed that consumers want higher interest rates and flexibility when opening a savings account. The UOB Stash Account enables just that - bonus interest earned without a lock-in period," added Ms Tan.
As part of the launch, UOB will offer all UOB Stash Account holders a bonus 1.2 per cent interest in November if the bank receives 6,000 or more applications for the account by Oct 31.