Checking Accounts Without Monthly Fees – Editor’s note: Updated on 4 August 2022 to reflect that DBS has revised its multiplier account interest rates, bringing the maximum effective interest rate to 3%.
Savings and current accounts are among the most common types of bank accounts in Singapore. It’s easy to think of them as the same, but they’re actually designed for different purposes.
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* Note: At the time of writing, DBS has phased out their current accounts and is instead steering people towards their multi-currency accounts.
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Many of Singapore’s local banks still offer a variety of checking accounts. These are mainly for your day-to-day transactions: withdrawing cash from an ATM, buying groceries or paying your utility bill, for example.
Checking accounts are not meant to store large amounts of money for long periods of time. That’s why they usually come with very low (or no) interest, with no penalties for withdrawing cash whenever you need it. They also come with a checking book, which most other accounts don’t offer.
With a checking account, you can make payments with a linked debit card, use online banking, make money transfers to other accounts, and more. Some of them also have overdraft facilities and additional support for phone banking, which can be useful for businesses, self-employed or freelancers.
Note that you’ll typically need a minimum balance of $2,000 to $3,000 to avoid paying service charges. For example, OCBC and UOB checking accounts charge a fee of $7.50 if the average daily balance for the month is less than $3,000.
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The average Singaporean earns about $4,500 a month (before CPF deductions) and saves 20% of that. This 20% should ideally be placed in a savings account, which earns a higher interest rate compared to checking accounts.
As the name suggests, a savings account is for your savings. You can still tap the funds if you need to, but it’s best to leave the money in the account. DBS, for example, will give you less interest for the month if you make a withdrawal from your MySavings account.
Savings accounts typically have no initial deposit or monthly account fees. But savings accounts have a minimum balance of $1,000 or $3,000, depending on your bank and account. If your balance falls below that, you’ll be charged a $2 or $5 fee.
Savings accounts in Singapore can seem a bit complicated at first. They usually have different interest rates depending on your income and the number of monthly transactions you make. These fees generally only apply to the first S$50,000 or so of your savings; you won’t earn more interest for saving more, so it’s better to funnel those funds elsewhere.
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Savings accounts have an interest rate starting at 0.05% per annum. However, many accounts (known as multiplier accounts) have bonus levels that can easily earn an interest rate of 1-2%. We will tell you later!
A multiplier account is a savings account and more. You get a basic interest amount, plus extra interest when you meet specific additional requirements, for example buying insurance, paying off your mortgage or spending on your credit card.
Multiplier accounts such as DBS Multiplier and OCBC 360 Account reward consumers for crediting their salary into the account and participating in banking products such as credit cards, insurance and investments. You get even more additional interest when you reach a minimum transaction size threshold, depending on the bank.
Many bank accounts in Singapore only hold Singapore dollars, so any foreign currency you get is automatically converted to SGD. Multi-currency accounts are the only exception. This is a plus if you travel often, shop internationally, or move money in foreign currencies.
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For example, the DBS Multi-Currency Account (MCA) can hold up to 12 foreign currencies, including the Euro, Hong Kong Dollar, Thai Baht and US Dollar.
Thinking about how and when you use your funds is the first step. But don’t just pick one – most banks in Singapore make it easy to open multiple accounts for different purposes.
Other things to consider are monthly fees, minimum balance requirements, customer support, debit/credit cards, checking account options, and transaction fees. Singapore’s financial markets offer a variety of checking and savings accounts to suit most needs. When it comes to managing money, you may wonder whether a checking or savings account is better equipped to meet your needs. According to Financial Research, 5.4% of American households are unbanked, meaning no one in these households has a bank account. That’s about 7.1 million households nationwide. Both types of bank accounts can help meet different needs for maintaining your finances, although they don’t work the same way.
A checking account is an account at a financial institution that allows you to carry out credit and debit transactions. These accounts may offer a debit card and check writing capabilities. Withdrawals can take the form of cash withdrawals made at a branch or automated teller machine (ATM), as well as debit card purchases, checks, money orders, ACH transfers and wire transfers. Similarly, deposits can be made by cash deposit, check or money order at a branch or ATM, as well as by mobile check deposit, automatic clearing transfer (ACH) or wire transfer.
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“If you need to use funds for everyday transactions, a checking account is the best way to do it,” says John Bergquist, president of Lift Financial in South Jordan, Utah.
Checking accounts may or may not earn interest. If so, the money you deposit earns interest as long as it remains in your account. These accounts may be offered by brick-and-mortar banks, online banks, credit unions, and other financial institutions.
A savings account is a deposit account designed to store funds that are not intended for everyday use, such as paying bills or spending. For example, you can open a savings account to grow your emergency fund, set aside money for a vacation, build your down payment if you plan to buy a home, or save money for home improvements. Like checking accounts, you can find savings accounts offered at different financial institutions, including traditional banks, online banks, and credit unions.
Between savings and checking accounts, you’re less likely to earn interest on the latter. Banks pay savers an annual percentage rate (APY) as an incentive to deposit and keep money in their savings accounts. However, the APY savers can earn is not uniform. It may vary from bank to bank. On average, the national savings rate was 0.07% in May 2022.
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“An online savings account is a much better option with a rate almost 20 times higher than a traditional checking account,” says Bergquist. “In fact, it’s even very similar to what you’d earn by buying a 10-year Treasury bond.”
Online banks often have the ability to pass on higher interest rates to savers, due to their lower overhead and operating costs. Rates can vary widely, but it’s not unthinkable to find high-yield online savings accounts from banks and credit unions that earn an APY between 1.90% and 2.25%.
In addition to higher interest rates on savings, online banks can charge fewer fees. For example, a traditional bank may charge a maintenance fee or monthly minimum balance for a savings account, while an online bank may not charge any of these fees.
A key mark in favor of current accounts is the fact that withdrawals are practically unlimited. You can use your card 10 times a day to shop, make daily cash withdrawals and pay your bills without being penalized by the bank. But that may not be the case with your savings account. This started with Regulation D, which was a rule imposed on banks by the Federal Reserve.
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Although withdrawal restrictions under Regulation D were lifted in April 2020, some financial institutions may still charge their customers excessive withdrawal fees if withdrawals are made from a savings account. It’s always a good idea to ask your bank or credit union about the rules of your savings account so you’re not surprised by fees you didn’t expect.
Shop the best deal, the one that suits your needs and lifestyle. For example, if you’re looking for better profitability, some banks reward customer loyalty with higher fees if they open a checking and savings account and link them.
When you compare checking and savings accounts, you may find that one suits your needs better than the other, and in some cases, you may benefit more from using both. These are some of the questions to consider when buying a checking or savings account.
“Banks are highly competitive in a ridiculously low interest rate environment, and there are occasional incentives that can make a checking or savings account more attractive,” says O’Donnell. For example, you can join a debit card rewards or rebate program that could save you money, or you can take advantage of promotional offers to open other accounts, such as a money market or certificate of deposit (CD).
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Finally, consider the type of access you need when it comes to banking.
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