Whenever my friends find out that I blog about money, they invariably come up to me and ask, “Sooooooo… which savings account is the best, ah?”
Gah. Do all my friends think that I spend my weekends meticulously comparing bank interest rates?
Most people automatically assume that the best savings account = the one with the highest interest rate. WRONG.
High interest rates are nice, but they don’t matter as much as you think. They’re nice to have, but not absolutely essential – Kinda like wireless earphones for the new iPhone 7 that everyone is going batshit over.
Instead of being lame and obsessing over things that don’t matter, I want to share with you the 3 simple criteria I use when evaluating savings accounts. I’ll also tell you which account I currently use, and the reasons behind it.
Let’s do this!
What I Look For In A Savings Account
Like an iPhone 7, your savings account simply a tool. A tool to park money that you’ll be spending in the next 1-5 years. The rest of your money should be in investments. If your investments are the turbo-charged supercar to grow your money, your savings account is just the parking lot.
That’s why I find it hilarious whenever I see people debating on hardwarezone over which account has a better interest rate. Unless you have a huuuuuggge figure in your savings account (a sign that you’re probably not utilising your money efficiently), that 0.05% difference in interest rates will amount to just a couple of bucks a month. Not really worth the trouble.
With that in mind, these are the 3 criteria I use when evaluating savings accounts:
Everyone knows that the basic POSB account you opened as a kid gives you a pathetic interest rate. (At the time of writing, it offers 0.05% in interest, which means that for every $10K you save, you get a grand total of 5 bucks a year. Thanks for the McChicken meal, POSB!).
Some banks will give you a higher rate if you fulfil certain criteria, like deposit a certain amount every month, or maintain a certain balance.
As long as the bank is offering a reasonably higher rate and doesn’t require you to jump through too many hoops, that’s something to consider. However, if your bank is asking you to moonwalk to Bhutan while simultaneously balancing a live chicken on your head, that extra 1% in interest is probably not worth the trouble.
Your savings account is where you’ll park money that you’ll access often, so convenience is key. Especially when you’ve queued for an hour for Michelin Star soy chicken noodles and find that you don’t have any money to pay and the hawker is staring at you with hellfire burning in his eyes. (Speaking from experience here)
In emergency situations like these, quick access to ATMs are important.
The great thing about savings accounts these days is that they can do so much more than simply be a place to deposit and withdraw money. Today, you can set savings goals, segregate your money into separate pots, pay bills, set up automated fund transfers, etc.
I know it sounds weird coming from someone who blogs about money, but I hate dealing with financial admin. So I automate as much of these tasks as I can. I use my savings account as my own personal robot butler, who takes care of all the unpleasant boring tasks that I hate doing. Thanks, Alfred!
My Favourite Savings Account
The account that I personally use is the OCBC 360 account, because it fulfils all the 3 criteria to a T. Check it:
In theory, you can earn up to 3.25% from the 360 account if you jump through all the hoops:
In practice, I usually only earn about 1.75% in interest because I don’t buy any insurance or Unit Trusts from OCBC, or spend $500 on their credit cards every month. (I spend on other banks’ cards now ever since I switched my focus from rebates to miles)
Still 1.75% is a decent enough interest for something that’s essentially no trouble at all. I’ve already automated my salary crediting and bill payment through GIRO, so everything else is just free money.
Everyone knows that POSB/DBS have the most ATMs in Singapore, but they also have the most number of users (citation needed – let me know if this is wrong). Therefore, you usually have to queue whenever you wanna use a POSB/DBS ATM.
On the other hand, OCBC has a decent network of ATMs with usually short or zero queues, from my experience. Lots of people also don’t know that you can use your OCBC ATM card to withdraw from any UOB ATMs for free up to twice a month, which dramatically expands your number of ATM options.
This is my favourite part of my OCBC savings account. Their online banking platform makes automation nerds like me crazzzily excited.
For example, you can segregate your money into different pots – like travel, housing, wedding, etc – and set an amount to automatically go into each pot every month:
You can pay all credit card bills (even from other banks), set up auto bill-pay for most organisations, or transfer between accounts within a single dashboard.
OCBC Pay Anyone is also pretty spiffy when you’re splitting drinks with friends and don’t wanna deal with cash. Since it allows you to transfer money even to non-OCBC members, you no longer have to deal with those annoying “Eh I transfer you when I get back – what’s your bank account number ah?” questions.
There are other cool features like comparing your spending/saving to others like you, though I didn’t find those particularly useful since they don’t include spending from other banks’ credit cards.
Still, OCBC has a pretty strong product ecosystem as a whole (with the exception of their mileage credit cards). It’s enough to get automation geeks like me all sweaty and excited. Oooh!
Stop Obsessing Over The “Best” Account
Okay, I know this post sounds like I’m advocating a single account that everyone should get, but that couldn’t be further from the truth.
To be honest, there isn’t a singular “best” account out there – it all depends on your needs.
For me, my top priorities are financial, convenience and automation. For you, it might be something different. (For example, I know of some weirdos whose singular goal is to become a DBS Treasures member so they can use the airport lounge. Really?)
At the end of the day, choosing a savings account is like choosing a toothbrush. It’s just a tool, and it fulfils the same basic purpose. The tiny features don’t matter all that much – instead, it’s how you use it. (Check out my free ebook Small Tweaks if you’d like a holistic strategy on how to use your savings account better)
Now, I’d like to hear from you – which savings account do YOU use, and why?