How to earn higher interest on your savings

What happened?

There have been many questions in the Beansprout community about how to earn a higher interest rate on our savings. 

After all, interest rates have remain elevated with the US Federal Reserve raising its benchmark rate again in July.

Hence, we decided to list down the key ways that we can make our savings work harder using high yield savings account, fixed deposit, foreign currency fixed deposit, T-bills, Singapore Savings Bonds (SSB) and money market funds. 

Ways to earn higher interest on your savings 

#1 - High yield savings account 

Singapore banks have been dangling attractive interest rates for their savings accounts in recent months. 

If you are able to fulfill certain requirements such a depositing your salary and spending on a credit card, there are a few savings accounts that offer a high interest rate:

• Standard Chartered Bonus Saver Account offers an effective interest rate of up to 7.88%
• OCBC 360 offers an effective interest rate of up to 7.65% 
• UOB One offers an effective interest rates of up to 5.0%

If you prefer a fuss-free account that do not require you to jump through hoops, there are also various options to consider. 

• CIMB FastSaver account is offering a promotional interest rate of 3.50% per annum for new customers
•  GXS Savings Account is offering an interest rate of 3.48% per annum.
• Standard Chartered eSaver account is offering an interest rate of 3.40% per annum for fresh funds deposited

Find out which is the best savings account in Singapore in August 2023.

#2 - Fixed deposit account 

After months of cutting their fixed deposit rates, some Singapore banks started raising their fixed deposit rates again in August 2023. 

• The best 3-month fixed deposit rate we found was 3.50% p.a. offered by Bank of China and HL Bank (as of 1 Aug 2023).
• The best 6-month fixed deposit rate we found was 3.50% p.a. offered by HL Bank (as of 1 Aug 2023).
• The best 9-month fixed deposit rate we found was 3.55% p.a. offered by CIMB (as of 1 Aug 2023).
• The best 12-month fixed deposit rate we found was 3.45% p.a. offered by HSBC (as of 1 Aug 2023).
• Amongst the local banks, DBS is offering a fixed deposit interest rate of 3.20% p.a. for 12-month fixed deposit, with a maximum deposit amount of S$19,999.

Like a savings account, a fixed deposit account is covered under the Singapore Deposit Insurance Scheme. The key difference between a fixed deposit account and a savings account is that your savings will be locked up over a tenure of 3 months and above in a fixed deposit account. 

Find out which fixed deposit account offers the best interest rate currently.

#3 - Foreign currency fixed deposit account

Apart from fixed deposit account, you can also consider a foreign currency fixed deposit account to park your savings and to earn a higher yield.

• The best 6-month US Dollar fixed deposit rate we found was 5.21% p.a. offered by UOB, for a minimum deposit of US$50,000 (As of 4 August 2023).
• The best 12-month US Dollar fixed deposit rate we found was 5.19% p.a. offered by UOB, for a minimum deposit of US$50,000 (As of 4 August 2023).

A foreign currency fixed deposit account might be useful especially if you have upcoming spending in the foreign currency. This may include plans to invest in overseas stock markets which will require foreign currency. 

However, you will face the foreign currency risk and potential losses if the foreign currency your fixed deposit is in weakens against the Singapore dollar. Also, deposits in foreign currencies are not covered under the Singapore deposit insurance scheme. 

Find out which USD fixed deposit account offers the best interest rate currently.

#4 - Singapore T-bills

Singapore Treasury Bills (T-bills) are fully backed by the Singapore government, and offer you a sound way to earn a regular interest payment.

Singapore T-bills have a short maturity period of 6 or 12 months. You should be prepared to hold the T-bills till maturity as T-bills offer less flexibility compared to the Singapore Savings Bonds.  

Many investors have also been buying T-bills to earn a higher return on their CPF ordinary account funds too. 

The cut-off yield for the 6-month T-bill on 3 August 2023 was at 3.75%, falling from a high of 4.4% in December 2022. The cut-off yield for the 12-month T-bill on 20 July 2023 was at 3.74%.  

Learn more about investing in Singapore Treasury Bills

#5 - Singapore Savings Bonds (SSBs)

Singapore Savings Bonds (SSBs) are issued by the Singapore government and provide you with a simple and low-cost way to generate safe returns. They are capital protected and you will get your investment amount back in full. 

The September issuance of the Singapore Savings Bonds offers a 1-year return of 3.01% and a 10-year average return of 3.06%.

Singapore Savings Bonds are flexible as you can choose to get your money back in any given month, with no penalty. You can invest with a minimum amount of $500, offering an attractive option to lock in long-term interest rates while offering flexibility of redeeming with no penalty.

Learn more about investing in Singapore Savings Bonds. 

#6 - Cash management account

You can also consider parking your savings in cash management accounts, which are effectively an investment into professionally-managed fund to generate a higher yield in a relatively low-risk way. 

These cash-management accounts may be offered by brokerages and robo-advisors, and seek to generate a higher yield compared to bank deposits. 

However, cash management accounts are not capital guaranteed, and they are also not covered under the Singapore deposit insurance scheme. 

If you’re looking to earn a higher yield for your savings, Phillip SMART Park is offering a guaranteed return of 5.8% p.a. for 30 days with their National Day promo which ends of 31st August 2023.

Learn how to choose the best cash management account to earn a higher interest rate on your savings. 

What would Beansprout do?

With interest rate at elevated levels, we should find ways to make our savings work harder.

We can start by parking our emergency cash in a high-yield savings account as they are highly liquid and can be accessed quickly if we ever need to tap on the emergency cash. 

Thereafter, we would consider investing our savings in the T-bill, as the yield is higher than fixed deposit rate currently. 

We would also consider Singapore Savings Bonds (SSBs) to lock in high interest rates for a longer period of time while having the flexibility to redeem anytime. 

Putting our savings into foreign currency fixed deposit and money market funds would allow us to earn a higher potential yield, but also come with higher risks. 

Use our Interest Maximiser Tool to find out which savings account allows you to earn the highest interest for your savings.