Not me thinking I managed to maximize my interest rate in savings accounts on a single income in Singapore, only for UOB to announce that they are revising the UOB One Account interest rate. The change will be implemented coming 1 May 2024 and the most significant change is the slashed interest rate from a maximum effective interest rate (EIR) of 5% to 4%.
A quick summary below.
Interest Before 1 May 2024
Before the announced interest rate revision, the maximum effective interest rate you can get from $500 credit card spending + salary crediting is 5%. If you have $500 credit card spending + 3 GIRO transactions, you will get a maximum effective interest rate of 3%. A simple $500 credit card spending will also earn you an interest rate of 0.65%.
These interest rates are applicable on the first $100k of your UOB One balance if you take the “salary crediting” path and the first $75k if you take the “3 GIRO transactions” path and “credit card spending only” path.
Interest From 1 May 2024
The maximum effective interest rate you can get from $500 credit card spending + salary crediting is now 4%. If you have $500 credit card spending + 3 GIRO transactions, you will now get a maximum effective interest rate of 2.4%. A simple $500 credit card spending will remain at an interest rate of 0.65%.
These interest rates are applicable on the first $150k of your UOB One balance if you take the “salary crediting” path and the first $125k if you take the “3 GIRO transactions” path. There is no change if you only have $500 credit card spending.
Should You Still Use UOB One Account?
The way we see it, UOB Bank is still keeping the existing criteria for meeting the higher interest rate. This means that you do not have to make any drastic adjustments or changes to your transactions. There is no push factor (except the lowered interest rates) that is demanding you to make changes immediately.
If you are big savers and have more than $75k stashed in your UOB One Account, your spare cash lying around will also be put to work, with the current eligible amount going up to $150k.
Under the previous structure, the maximum interest you can earn is $5k on a $100k account if you have $500 credit card spending + salary crediting. With the new structure, you can earn $6k on a $150k account with the same criteria. However, this also means your money is no longer working as effectively as the funds required are 50% more for a 20% increase in interest earned.
If we were to compare to other local banks, OCBC Bank has a better interest rate if you were to credit your salary with them. If you can hit the “salary” + “save” + “spend” criteria (equivalent to that of your transaction on UOB One account), you can get a maximum effective interest rate of 4.6% on the first $100k. The catch is you have to ensure that your account balance increases by $500 each month. Otherwise, you are only getting 3.1%, which is lower than that of the UOB One account. This may require a little effort to micromanage your account and ensure that you can hit this criteria.
On the other hand, despite the revised interest rate, UOB Bank’s criteria are more straightforward, and if you have been meeting them previously, there is no additional effort required from you.
UOB Bank seems to be the only bank that is rewarding customers to transact with them via the “3 GIRO transactions” path. If you have been using the “3 GIRO transactions” path to get the higher interest rates (like we do), there do not seem to be any alternatives.
As a single income family in Singapore, maximizing interest rate without having “salary” credited is our priority, and UOB Bank allows us to use our GIRO billing arrangement to get higher interest. We will be keeping our UOB One account and continuing our current transaction arrangements with them. While we will take a hit in terms of the lowered interest rates, we have not yet been also to find any other alternatives that suit our requirements.
Last Updated: 02 Apr 2024
