UOB and OCBC to cut interest rates on flagship savings accounts from May 1

SINGAPORE – Interest rates on more savings accounts are coming down in Singapore, with two of the three local banks – UOB and OCBC Bank – reducing rates on their flagship accounts,

the UOB One and OCBC 360, from May 1. 

The Straits Times understands that DBS Bank will be keeping the rates on its flagship Multiplier account for now.

A flagship savings account is a bank’s best savings product, which offers bonus interest rates that go up as customers transact more with the bank.

Transactions that qualify for the bonus rates include salary crediting, spending a minimum amount on a credit card, taking up a loan, and investing or buying an insurance policy from the bank.

From May, OCBC will lower the bonus rates for some categories – salary credit, save and spend – while retaining the rates for the invest and insure categories.  

The 360 account will offer a maximum effective interest rate of 6.3 per cent a year on the first $100,000, down from 7.65 per cent. To earn the revised rate, a depositor has to credit his salary, spend, save, insure and invest with the bank.

Ms Tan Siew Lee, head of group wealth management at OCBC, said interest rates have “softened over the past one year” and the bank is adjusting the rates for the 360 account “in line with prevailing market conditions”.

Meanwhile, UOB One customers will earn up to 5.3 per cent on their first $150,000, down from 6 per cent. To qualify, they have to credit their salary and spend a minimum of $500 on their credit cards. Under the new rate structure, the highest effective interest rate they can earn is 3.3 per cent, down from 4 per cent currently.

The upcoming revision in rates for the UOB One account marks the bank’s second cut in two years. On May 1, 2024, it reduced the rate from a range of 3.85 per cent to 7.8 per cent per annum to a range of 3 per cent to 4.5 per cent, for balances of up to $100,000.

UOB is the only local bank to have previously cut its savings rates for its flagship account.

A spokesperson for UOB said the rate revisions reflect “longer-term interest rate expectations”.

At DBS, the Multiplier account will continue to offer a maximum interest rate of 4.1 per cent per annum on the first $100,000, provided customers credit their salary and transact in at least three categories every month. The total transaction value must be at least $30,000.

Mr Michael Makdad, senior equity analyst at investment research firm Morningstar, is “not expecting UOB and OCBC to cut deposit rates again in the very near future”.

“Singapore banks’ Casa ratios remain a bit lower than before the rate-hiking cycle (that started in August 2022),” he noted. He thinks “the banks are still looking to attract retail deposits for funding”.

Casa ratio stands for current and savings account ratio. It is an indication of how much of a bank’s total customer deposits are held in low-interest current and savings accounts.

A high Casa ratio means the bank has a higher percentage of low-cost deposits that it can lend out to earn higher returns.

OCBC had the lowest Casa ratio of 48.8 per cent as at December 2024, while UOB had the highest at 54.6 per cent. DBS’ Casa ratio stood at 52 per cent as at December 2024.

Mr Makdad said a Casa ratio of 50 per cent to 60 per cent is a “decent level based on the current rate environment”. 

The three digital banks serving retail customers – Trust Bank, GXS Bank and MariBank – have also lowered their savings rates.

Since April 1, MariBank’s customers have been earning a base rate of 2.28 per cent per annum, down from 2.5 per cent.

The base interest rate for the GXS main account has been 2.08 per cent per annum, down from 2.38 per cent, since Feb 11.

However, GXS customers can earn bonus rates of 0.4 per cent and 0.5 per cent per annum by locking up some of their funds in a Boost Pocket for one or three months respectively – akin to a fixed deposit. This allows them to potentially earn up to 2.58 per cent per annum on their GXS savings account.

GXS savings pockets, used for different savings goals, now earn 2.38 per cent per annum, down from 2.68 per cent. 

The third digital bank, Trust Bank, has trimmed its interest rates twice since June 1, 2024.

Trust customers now earn a base rate of 0.75 per cent and up to 2.75 per cent per annum if they fulfil certain criteria such as salary credit, minimum spending or maintaining a minimum balance.

Globally, interest rates are set to fall further. Mr Hugh Chung, chief investment officer at digital wealth platform Endowus, said that market indicators point to slower growth. 

“Despite the concerns of inflation and tariffs, the 10-year Treasury yield has come down from the 4.5 per cent to 4.6 per cent levels,” Mr Chung noted. “What the market is telling you is that the outlook for growth is slower and in that situation, it is hard for interest rates to go much higher.”

The CME FedWatch tool further indicates that markets now expect four to five rate cuts in the US in 2025, up from one to two cuts forecast in January and February.

Amid the wave of rate cuts, DBS remains committed to helping customers grow their assets and manage their liabilities, said Mr Brandon Lam, head of deposits and financing solutions at DBS Consumer Banking Group.

Besides keeping the Multiplier account rate unchanged for now, DBS is also lowering its three-year fixed HDB home loan rate to 2.5 per cent per annum – lower than the 2.6 per cent concessionary rate offered by HDB.

The move will help home owners and aspiring buyers to reduce their monthly repayments, said Mr Lam.

Meanwhile, Maybank – which does not offer a flagship savings account – has kept the rates on its suite of savings products unchanged. For instance, the maximum rate on its Save Up Programme remains at 4 per cent per annum, after it was raised on June 1, 2023.

Some consumers, like 34-year-old lab technician Dallas Goh, are taking the savings rate cuts in their stride.

Mr Goh, who has both the OCBC 360 and the UOB One accounts, has long diversified his spare cash into money market funds. He is allocating more money each month towards equities, saying he is “glad that he invested in the Singapore banks for their dividends”.

Ms Kelly Chiew, a 32-year-old manager with an OCBC 360 account, is taking a wait-and-see approach.

“The cuts are not surprising, given the current market conditions,” she said. “It feels too much of a knee-jerk reaction to move all assets, and it might be wiser to wait for now.”