Come Aug 1, the UOB One account will have some changes as stated above:
- Higher interest rate of up to 3.88%
- Interest rate starts from 1.85% with card spend of $500 and salary credit/3 GIRO debit transactions
- Interest rate starts from 1.5% with card spend of $500
- Balance cap of $75k to earn bonus interest
Sounds like a good deal no? Let’s recap what the previous interest rate structure was (refer to previous article written in Aug 2015) and compare with the new interest structure
At first glance, things are better for those who are just starting out since the lowest interest rates start from 1.5% and 1.85% instead of 1% and 1.5% respectively. As such, for the first $30k, the new account will yield a better interest rate than before. However, for those who have been consistently at the $50k level, then we need to look at the effective interest rate. In the past, when the highest interest rate was 3.33% (i.e. meeting both card spend and salary credit/3 GIRO transactions), the effective interest rate was 2.432% ($1216 per annum) for a $50k deposit. Now, since the cap has been increased to $75k, the interest earned per year will be $1827 per annum (effective interest rate being 2.436% p.a). As such, you can put in an extra $25k to earn interest at 2.43% p.a.
On the contrary, if you belong to Category A (i.e. meet card spend of $500/mth), then for $50k, you would have earned $800 in interest in the past (effective interest rate 1.6% p.a.). However, under the new scheme, then it will be a flat 1.5%, meaning the amount of interest earned will be less.
In conclusion, the new scheme will benefit those who can meet the higher standards (meeting both card spend and salary credit/3 GIRO transactions) as they can put in an extra $25k cash to earn an effective interest rate of 2.436%).
Are you topping up your UOB One savings account now? The new rate starts from 1 August 2018