Is Your Money In The Right Place?
Saving is hard. Picking the right savings account for your needs isn’t easy, either. There are a lot of types of savings accounts out there, so it pays to do your research. If your money is sitting in a 0.1% interest per year account, you’re doing it wrong!
We’ve laid out a couple of scenarios for would-be savers to help you find the right savings account for your needs:
If you want to set aside money for an emergency fund, or need to dip into your savings frequently:
Get a basic savings account.
A basic savings account is a good choice if you’re just starting to save and want to be prepared for unexpected expenses. When you look for a good account in which to stash your emergency fund, consider the following things:
Easy access. You want to be able to get to your savings easily, in case of an emergency. Thus, look at accounts that don’t charge you fees for frequent withdrawals.
Low required initial deposit/minimum balance. Something with a low initial deposit and minimum required daily balance makes it easier for you to start saving.
Competitive interest rates. The usual interest rate for basic savings accounts ranges from 0.25% to 0.50%. Look for the best rates you can get for the daily balance you can afford to have. (There’s no use wanting that 2.00% interest rate if you can’t afford to have P4 million in your account.)
Most banks have regular, basic savings accounts you can open online right now. These kinds of accounts usually don’t have a very high interest rate, but they do start earning interest at lower amounts, from P1,000 and up. Even though the minimum required daily balance can be low, there are still penalties for going below it, so always make sure you’re at least at the minimum to avoid extra fees.
Putting your emergency fund money in a basic savings account helps you get started with saving, earns you a little bit of interest while you’re at it, and lets you have easy access to it if, God forbid, an emergency does come up.
Good basic savings accounts:
BDO ATM Savings. Initial deposit and minimum required average daily balance (ADB) of P2,000. Starts earning 0.25% interest per year at P5,000.
Metrobank ET Savings Account. Initial deposit and minimum required ADB of P2,000. Starts earning 0.25% interest per year at P10,000.
BPI Save-Up Automatic Savings + Insurance. No minimum initial deposit. Minimum ADB of P1,000. Starts earning 0.50% interest per year at P1,000.
PSBank ATM Savings. Minimum maintaining balance of P2,000. Starts earning 0.50% interest per year at P2,000.
Security Bank Build-Up Savings. Initial deposit and minimum required ADB of P5,000 . Starts earning 0.50% interest per year at P10,000.
RCBC Payroll Savings. Initial deposit of P100. Starts earning 0.25% interest at P10,000.
If you want higher returns but easy access, or don’t need to dip into your account too often:
Open a high-yield savings account.
Let’s say you have a higher amount of money you want to put in a bank — around P50,000 and up. You know that time deposits have higher interest rates than savings accounts, but you’re not ready to lock away your money for a whole year. Thankfully, there’s a neat compromise: high-yield savings accounts. You get interest rates higher than the 0.50% maximum you’d get with a basic account (especially if your balance is higher), but you can still access your money.
You should shop around for the best rate for your money. Depending on how much you want to deposit, you can find banks with interest rates that go as high as 2.00% per year. You’ll have to make larger initial deposits, though. While basic accounts let you start with P2,000, these high-yield accounts start at around P30,000. You’ll also have to maintain a higher account daily balance.
However, be warned — some high-yield accounts limit the amount of withdrawals you can make in a specific time period, and if you exceed that limit, you get hit with a fee. But some banks, instead of punishing you for making withdrawals, will give you bonus interest if you don’t make any (or make only a limited number of withdrawals) within a month. Check your desired savings account for any bonus interest you could get.
If you can afford to leave your savings alone for a few months, and want your money to earn more while it sits in the account, take a look at these higher-interest accounts:
BPI Direct Maxi-Saver Savings. Required initial deposit and ADB of P25,000. Earn 0.5% interest per year for amounts below P300,000, and up to 1.25% when your balance is above P1 million. If you don’t make withdrawals within a month, you get 0.5% bonus interest.
Allied Savings Bank Angat Savings Account. Required initial deposit and ADB of P10,000. Earns 1.75% per year. Limited to two withdrawals a month.
Security Bank Build-Up Savings (Premier). Initial deposit and minimum required ADB of P50,000. Earns 1.00% interest per year.
BDO Optimum Savings. Required initial deposit and ADB of P30,000. Limited to three withdrawals a month.
ChinaBank MoneyPlus Savings. Required initial deposit and ADB of P20,000. Starts earning 0.25% interest per year at P50,000. By maintaining at least P50,000 and limiting your withdrawals to two times a month, you can get a bonus rate of 0.25%, 0.375%, 0.50%, and 0.75% (depending on how much money you have in the account), which you add to the 0.25% base interest rate.
Citibank Peso Bonus Saver. Required initial deposit and ADB of P50,000. Its starting interest rate is 0.7% per month, but if you increase your balance by at least P5,000 every month, you earn a bonus interest rate of 0.10% additional each month. This means that after a year of depositing P5,000 every month, you’ll enjoy 1.90% interest per year, as long as you keep depositing P5,000 a month after the first year is done.
Want to take a look at interest rates for savings accounts across different banks? We’ve got the comparison tool just for that.
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