If you keep cash, like many people do, this article tells you which banks offer the best “risk-free interests” on your cash deposits.
By “risk-free”, we mean you do not have to take any form of risk, whether it is an investment risk, or even freezing your money for a period of time (i.e. you can’t withdraw). You want to keep your money liquid – you want the flexibility of withdrawing your money at any time. And you do not want to incur any possible investment loss.
Of course, it’s never 100% zero risk. There’s always this extremely tiny risk of the bank collapsing and reneging on all payments.
There are some conditions though. For 3 of the banks that we are highlighting in this article, you need to credit your salary ($2k for BOC and OCBC, but $3k for Stanchart), incur some credit card spend ($500/mth), and pay 3 bills to get the bonus interests.
Without further ado, these are the best bank accounts (based on our research) to place your money and keep it liquid:
(1) Bank of China SmartSaver – At 0.4% pa base interest, 0.6% bill payment bonus interest, 1% salary credit bonus interest, and 1.55% card spend bonus interest, you can earn about $175/mth in interests if you deposit $60k, which is the maximum balance that the bank will pay the bonus interests on. [Update 1/11/16: BOC has just revised the terms of their SmartSaver account.]
(2) Standard Chartered BonusSaver – Although the base rate is a low 0.1%, this account makes up for it by paying bonus interests on up to $100k of your balance. Its bonus interests are 0.25% for bill payments, 1% for salary credit, and 0.78% for card spend (or 1.78% if you spend $2k/mth). Note also that Stanchart requires each bill payment to be at least $50. You can earn about $180/mth in interests assuming a $100k balance and $500 monthly card spend, or $265/mth if you can incur $2k of card spend.
(3) OCBC 360 – This used to be the best bank account, but not anymore. At 0.05% pa base interest, 0.5% bill payment bonus interest, 1.2% salary credit bonus interest, and 0.5% card spend bonus interest, you can earn about $110/mth in interests if you deposit $60k, which is the maximum balance that the bank will pay the bonus interests on.
[Update: A reader pointed out that UOB has a similar account called UOB ONE. However, at an effective 2.43% pa interest rate, or about $100 interest per month, UOB ONE would rank lower than OCBC overall.]
* if a number is hightlighted in bold above, it means the corresponding bank account ranks best for that category.
If you have $220k of cash savings, a nice boss who can split your salary into $2k / $2k / $3k, and if you have 9 bills to pay and can incur $3k of credit card spending each month, you can earn a theoretical risk-free combined interest of about $175 + $265 + $110 = $550. Every month.
But if you can only incur $1.5k of card spend each month, the combined interest will be slightly lower at $175 + $180 + $110 = $465. Risk free.