Flight of Free Cash

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It's the time of the year again where the luckier ones amongst us get some bonus for hard work put in for the past 365 days. What are you going to do with the extra amount of cash on hand now?

Being the thrifty (or miserly stingy, depending on your perspective) person I am, much of the extra cash is going right into savings. But if we look in-depth at the current savings situation in Singapore, we are being offered very bad deals. Where the SIBID (Singapore Interbank Bid Rate) or SIBOR (Singapore Interbank Offered Rate) are at highs of almost 3%, most banks are offering paltry savings interest rates of not even 0.5% p.a. while loans interest rates have remained sky high. Local banks are making more and more money out of our deposits, fattening their bottomline while not letting depositors enjoy the higher interest rates.

What should we as consumers do about it? I advocate moving the cash elsewhere so that local banks that are flushed with cash will be forced to offer better rates. Standard Chartered has the e$aver account that offers rates as high as 2.45% while Fundsupermart has a cash account that offers rates pegged to 0.5% below SIBID.

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