3 Types of Bank Accounts You Should Consider Opening This New Year, Money News

Getting stuck in mile-long ATM lines is one of the most frustrating times in a Singaporean’s life, especially when just a meter away is the ATM machine. ‘a rival bank that is so deserted it seems haunted.

But avoiding ATM lines isn’t the only reason you should open more than one bank account. Here are three types of bank accounts that might meet your needs.

High interest savings account for long-term savings

There is a very good reason why you should choose to separate your long term savings from the account you are withdrawing money from on a daily basis.

If you have a lump sum of money that you barely touch (such as long-term savings or an emergency fund that you can only access when absolutely necessary), you can take advantage of interest rates. more attractive interest rates by depositing them in high interest savings. Account.

Such accounts often reward you with higher interest when you deposit certain amounts of money and / or when you don’t make any withdrawals for a certain period of time.

Here are some popular savings accounts with the highest interest rates:

– The CIMB FastSaver account entitles you to 1% interest on any amount of money in your account up to $ 10,000 when you have the CIMB Visa Signature credit card.

– In addition to the base interest rate of 0.05%, OCBC 360 deposit account offers you an additional 2.33% when you credit your salary (at least $ 1,800) through GIRO, increase the average daily balance by $ 500, buy (selected) OCBC insurance plans, and buy (selected) investment products from OCBC.

– The DBS multiplier account has a base interest rate of 0.05%. You can get up to 2% interest if you do these two things: credit your salary or dividends or connect your account to SGFinDex and spend at least $ 2,000 with your credit card, mortgage, insurance or your investments through this account.

The DBS multiplier account is prioritized and you must study this painting before you get started. We know what you are thinking … hard to make money lah.

Bank account for personal expenses

It is often a good idea to separate the account you make regular withdrawals from and the account you hide your long-term savings from.

Some of the best high interest accounts don’t make withdrawals easy – banks may not have a lot of ATM facilities, or the account itself may reward you for not making withdrawals (as it does with the OCBC Bonus + account which gives you 0.15% a year for no withdrawals, for example).

Your priority when it comes to which account you use for personal expenses should be ease of withdrawal and cash payment. When it comes to ATM availability, the big winners are POSB / DBS, UOB and OCBC.

You also want to verify that the account offers internet banking (so that you can easily transfer funds to others) and phone banking if you need them. For Singaporeans who might need to transfer funds to local bank accounts, it makes sense to choose an account at one of the local banks.

Finally, while you usually pay by credit card, it’s helpful that you can also deduct funds directly from your account using NETS at checkout, for merchants who don’t accept credit card payments.

Note that there’s a good chance this account will give you a pathetic interest rate. Therefore, you should keep exactly what you need to spend each month there, and then funnel the rest of your money into your long-term savings account. For this reason, choose an account with a zero or low minimum balance.

An account for other short-term goals

Saving for something big? It may make sense to open a separate account just for this purpose.

Besides the benefit of keeping the money separate from your other funds to avoid confusion or to make it easier for you and your partner to control and contribute (if applicable), you can sometimes also receive benefits for keeping your money in accounts. individuals. .

For starters, all Singaporean parents should have opened a Child Development Account in which their Baby Bonus is deposited in the form of a cash gift and dollar for dollar consideration of the money they have saved for their child’s education and health expenses.

If you’re looking for something relatively simple to put your savings aside, you might want to consider accounts like the revamped DBS Multiplier Account, which you can read more about here.

If you credit your salary to a DBS / POSB account, use a DBS / POSB credit card and SGFinDex, the multiplier account allows you to have the option of withdrawing your money in an emergency.

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A note on opening multiple accounts to maximize insurance

Under the Singapore Deposit Insurance Scheme, you receive insurance on your deposits up to $ 75,000 per bank. This means that if the bank folds and all your money disappears, you are protected for at least the first $ 75,000.

If you have $ 200,000 in savings, then it makes sense to spread it over four different banks (note that you will need to keep the money in different banks, not just in different accounts) so that you know that every penny is insured.

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This article first appeared in MoneySmart.