"Oh my gosh! I can not believe I found this!" Is usually my initial reaction whenever I find a special object that seems to come out of thin air especially when it's outside on the ground in the middle of a public area that seemed to go unnoticed. Of course, I'm talking about finding money! A coin of small value to me is still worth the effort to pick up and put in my pocket. I can later add this one coin to my collection of coins and in time accumulate enough to buy that new pair of shoes I've been wanting.

Of course, we all can not find money out of thin air and collecting coins to buy a new pair of shoes might take forever. This scenario was created to show that you can start a savings account by adding a small portion of your income into a savings account. But where do you begin? What is a savings account? What bank offers the best savings interest rates in Singapore?

A savings account enables you to keep your money in a secure place while it collects a small amount of interest each month.

savings interest rates

Gonzalo Aragon/shutterstock.com

How Does A Savings Account Work in Singapore?

A deposit account allows you to maintain your funds in a risk-free place and produce a decent amount of interest at the same time. These accounts generally require a minimum amount to open, it ranges from as little as S$10 to as high as S$1,000. However, there are some accounts that not involve any minimum deposit amount too. This depends on what bank you are looking into to start a savings account.

Interest Rates of Savings Accounts in Singapore

Interest on deposit accounts is usually combined daily and will be paid monthly. The compounding interest rate is the rate the bank is paying based on your bank balance (including interest generated in the past). A compounding interest rate allows the principal amount to grow at a faster rate rather than simple interest, which is calculated as a percentage of the principal amount only.

How is the interest rate on my savings account determined?

Depending on how much money you have in the bank account may look at any time of day. The interest is determined on a daily basis and applies to the amount of money and how long the money has been in your account, the bank pays your interest once a month.

For example, your bank gives you a 0.2% per annum interest for your first $10,000 and 0.3% for the next $40,000 in your savings account. From January 1st to January 20th, your account balance is $5,000 but on January 21st you made a deposit of $10,000. Thus, from 21st to 31st of January, your account balance is $15,000.

Here are the calculations done by the bank: 1 - 20 January: (0.2% / 365) x 20 days x 5,000 = $0.55 21 - 31 January: (0.2% / 365 x 11 days x first 10,000) + (0.3% / 365 x 11 days x next 5,000) = $0.6 + $0.45 Total interest return for Jan = 0.55 + 0.6 + 0.45 = $1.60

It's a lot of math but that's what the bank is for!

Take Advantage!

The advantages of owning a savings account in a bank helps to encourage the healthy habitat of putting some of your money away towards a financial goal. The benefit of a saving account enables account holders to earn interest on their income, provides availability of fast cash funds through ATM facilities, gives abilities for you to use like internet banking and online transactions. Opening a savings account can help you, in the long run, this can also help establish a relationship with a bank and contributes positively to your credit.

So what bank offers the best savings account for you to open? Let's take a look at a couple and notice the differences between them. One account requires you to have a large minimum deposit while the other doesn't require one at all. Later on, I will provide a list of the top 6 savings account in Singapore.

The Standard Charted Bonus Saver is one of the top savings account to open with an interest rate of 3.88% but your minimum deposit would be $100,000. That is a high minimum requirement but the question is ' What is the Bonus Saver Account?' BonusSaver includes of a BonusSaver account (which is an innovative Current Account that gives you one of the highest interest rates in town), and BonusSaver World MasterCard credit and/or debit card(s) which may be linked to the BonuSaver account. Earn up to 3.88% p.a. interest on your savings for the first S$100,000 in your BonusSaver account when you do any of the following: * Credit your salary through GIRO * Pay bills online/through GIRO * Spend on your BonusSaver Credit or Debit Card * Invest with a Unit Trust or insure with a regular premium insurance policy The account comes with eStatements and you can choose to have a checkbook (checkbook facility is not available for BonusSaver accounts opened through an online application).

The benefits of having an account like this are that it's unlike any other current and savings accounts. BonusSaver is a unique account offering interest rates that are higher than any time deposits. Earning up to 3.88% p.a. interest for up to S$100,000 deposit as you combine your spends, salary credit, bill payments and wealth needs with just a single account.

This type of savings account can be very efficient but only to the right person but what if you don't have S$100,000 to start off a saving account? Don't sweat it, the DBS Multiplier Programme has a minimum deposit account of S$0 with an interest rate of up to 3.5% p.a.

This DBS Multiplier Programme gives you bonus interest in banking with DBS in multiple categories. Salary credit is required, but apart from that you can choose from a credit card, investment, insurance, and home loan. Even though it is an S$0 minimum deposit you must make sure your total transactions (including salary) add up to at least $2,000 a month. So even if you’re earning less than $2,000 a month, you can still get a modest interest rate. So the more transactions you can make the more interest you can get.

The Best Savings Bank Accounts

There are many more options for opening a savings account here are the top six of 2019 and their benefits:

  1. UOB One account has an interest rate of 1.5% to 1.85% p.a. and to increase your interest rate you would have to use a credit card spend plus salary credit OR a bill payment

  2. OCBC 360 account has an interest rate of 1.55% to 2.45% p.a. to increase your interest rate you would have to use a credit card spend + salary credit increase monthly balance + invest $20,000

  3. DBS Multiplier account has an interest rate of 1.55% to 2.2% p.a. but to increase your interest rate you would need to Salary credit + credit card spend + invest/home loan

  4. POSB SAYE account has an interest rate of 2% p.a. to increase your interest rate you would need to save a fixed amount every month + don’t touch for 2 years

  5. Standard Chartered BonusSaver account has an interest rate of 1.88% p.a. and to increase this interest rate you would need a Salary credit (>$3,000) + credit card spend

  6. Bank of China SmartSaverhas an interest rate of of 1.45% to 3.4% p.a. but to increase the interest rate you need a Salary credit (>$6,000) + credit card spend + bill payment