Savings Account in the Philippines – the Basics
Banks in the Philippines offer consumers multiple options when it comes to saving money for a raint day, and a savings account is one of them. What exactly is a savings account and how do people earn money from it?
Savings account is a type of bank account that offers consumers the protection of their funds while earning a low, stable interest rate usually between 0.5% to 1% annually. The Philippines National Bank (PNB) for example offers 0.5% interest rate on peso-denominated savings accounts and 0.75% for foreign currency-denominated accounts.
The money in savings accounts is highly liquid, meaning it can be withdrawn anytime it is needed. Many people find savings accounts unprofitable due to its low interest rate as compared to time deposit accounts where much higher rates of interest can be earned. However, money saved in a time deposit account, which means you cannot withdraw your time deposit savings until it matures (usually within 1, 3, 6, or 12 months). Early withdrawals result in you forfeiting interest earned during the period.
Benefits of a Savings Account
The benefits of maintaining a savings account are manifold. Here are some below.
- Protection. Your money is safe-kept in the bank and is protected under the law. All Philippine banks are members of Philippine Deposit Insurance Corporation (PDIC) and savings deposits are insured and secured up to a maximum amount of PHP500,000 per person. In the event of a bank’s failure, the PDIC will pay depositors their savings amount subject to the maximum amount.
- Liquidity. The money in your savings account is very liquid, which means it is easily withdrawn as cash without any penalty. Liquidity is useful especially in times of emergencies when extra funds are needed to make up for shortfalls in cash.
- Convenience. Your savings account can be used to electronically transfer funds to friends, and can be used as a payroll account by companies. You can withdraw cash anytime, using ATM machines around the country.
- Earn Some Interest. Your savings account earns interest although the rate is usually lower than many other investment types. Still, it sure beats the interest (zero!) earned by hiding your cash under the pillow.
Opening a savings account is easy. Find out more about savings account in the Philippines by checking out iMoney’s upcoming savings account comparison tool!