Given the rapid lowering of interest rates in recent months, it is perhaps inevitable that banks have once again changed their interest rates for CASA (current account & savings account) products. Among those banks offering the “contingent high interest rate” CASA products, UOB is probably the first to make the change this quarter with the announced revision for its popular UOB One Account.
Lower Interest Rates for UOB One Account Effective 1st May 2020
The qualifying conditions remain the same. You need to spend at least S$ 500 per month on a UOB credit card (for example: UOB One Card, UOB Yolo Card, UOB Lady’s Card) to earn the lower interest rate tier. To earn the higher interest rate tier, you will have to spend the said amount on your UOB credit card AND credit your salary to the account or make 3 GIRO payments per month.
UOB spells out the revised interest rates clearly. From about 2.44% p.a. effective interest, it has now dropped to around 1.796% p.a. assuming you max out the S$75,000 account balance on your UOB One Account.
What to do now?
Despite the drop in interest rates for the UOB One Account, it still serves a purpose. This is considering that other “contingent high interest rate” CASA products have revised their mechanics previously, even before taking into account the current market environment. Many of the UOB One Account’s competitors are even less desirable now (case in point – the revised Citi Maxigain). That being said, to still fulfill a semblance of getting a high interest rate, you may want to switch a little bit and consider the OCBC 360 Account (assuming you are not already using it) to supplement the UOB One Account.
The good thing about the UOB One Account despite the lowered interest rate is that you are still not required to credit your salary there. You can easily replace this criteria through the “make 3 GIRO debit transactions” rule. The 3 GIRO debit transactions can be easily fulfilled by setting up GIRO on your UOB credit cards. If you have 3 UOB credit cards, that already qualifies as 3 GIRO transactions. Note that there is no minimum $ amount for the GIRO payment to qualify.
In that sense, you may still consider the UOB One Account if you have already maxed out your balance on the OCBC 360 (approximately 2.4% p.a. on up to S$ 70,000) and are looking for another place to “park” the extra funds.
Given the current renewed low interest rate environment, even my suggestion above might not hold for long if other banks also change their rates for their respective savings products. Apart from this, there is of course, no one-size-fits-all solution. Given the multitude of permutations out there, identifying the ideal savings account depends on one’s financial circumstance, spending habits, etc. as well.