Still Holding Onto Your First Savings Account? Here's Why You Should Change It

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08 Apr 2019

Most of us had our first savings account opened with the bank when we were young while lugging our piggy banks to the physical bank with our grandparents.

ANDDDD some of us are still holding onto our first savings account that we had since we were a kid. I’ve got to admit, that’s me with the legendary POSBkids Account.

Anyhoo, we are not sponsored to write this, I’m still holding onto my POSBkids account and I really want to know how much I’m missing out?

My First Savings Account

Even if it is not a POSBkids account, it would most probably be another kid’s saving account too but in another bank. Here are its perks:

You get earn daily interest.
No minimum deposit and fall-below fee until you turn 21 years old.
Waiver of coin deposit fee until you turn 16 years old.

Or maybe just my grandmother nagging at me about POSB being the best bank.

Pretty sure you have outgrown these benefits and they no longer apply to you, and they will charge you $2/month if you fail to keep your account above $500.

How many of us ever kena the $2 charge?

Daily interest? Earning 0.00013699% per day in interest should not interest you. Let’s be honest, especially where you can earn more from high interest-yield savings account.

If you do not understand the rationale behind that irrational number, it’s the interest that POSBkids Account offers, 0.05%, divided by a year, 365 days.

Opportunity Cost of Holding Onto My First Savings Account

I am using this savings calculator to check how I am able better optimise my savings by finding the bank that offers me the highest interest for their savings account.

Base off a profile of an average Singaporean, whose

Current Savings: $10,000
Salary: $3,033 (median salary of Singaporeans)
Credit Card Spending: $500
Investment: $200 (Monthly)

The best savings account that I should have would be DBS Multiplier earning me 2% interest per annum, which is an additional $200 on $10,000 savings.

Yeah, now you will be saying there are a lot of conditions for you to fulfil. Don’t worry, we got your back!

NO FRILLS, NO CHILLS, JUST THRILLS

I mean, what if you are currently not salaried but you just want a high interest yielding savings account with no conditions.

Like for example, if you are:

A Freelancer
A Student

CIMB FastSaver is offering 1% for a minimum deposit of $1,000 with no fall-below fee.

One of the reviews by Chen Yong Ng from the Seedly Community

“Fuss-free way to get 1% interest with no salary crediting and spending required. It is a good account for students with no salary.”

How Does Earning 0.95% More In Interest Look Like?

With a savings of $10,000, here is how your savings could look like if you made a change in your savings account.

	POSBkids Account (0.05%)	CIMB Fast Saver (1%)	Difference (0.95%)
1st Year	S$10,005	S$10,100	S$95
2nd Year	S$10,010	S$10,201	S$191
5th Year	S$10,025	S$10,510	S$485
10th Year	S$10,050	S$11,046	S$996

Note: Figures are rounded up to the nearest dollar

After the 2nd year, you can go for a holiday to Thailand.
After the 10th year, you would be able to fly to Japan!

Why are we throwing such opportunities away?

Now, How Does Earning 1.95% More In Interest Look Like?

With the same amount of savings of $10,000 as above, here is the difference if you use DBS Multiplier as your savings account:

	POSBkids Account (0.05%)	DBS Multiplier (2%)	DIFFERENCE (1.95%)
1st Year	S$10,005	S$10,200	S$195
2nd Year	S$10,010	S$10,404	S$394
5th Year	S$10,025	S$11,041	S$1,016
10th Year	S$10,050	S$12,190	S$2,140

Note: Figures are rounded up to the nearest dollar

After the 10th year, you can take the interest earned and go on an all expense paid trip to Iceland. You can even go skydiving!

You can beat the inflation rate of 1.9% by leaving your money in DBS Multiplier savings account.

Convinced yet?

I hope you are. But being a sentimental-being, and having memorised my POSBkids Account number, I think it would be a little hard for me to close my first savings account. *shed tears

Personal Finance as a Whole

Savings is just one portion of your personal finance journey, there is still investment and expenses especially when it comes to allocating your salary. Or even finding the combination to maximise your interest and rebates. Wow, personal finance is really a journey.

Don’t worry! We are here to journey on together, you can start by reading unbiased financial content or even asking any questions or reading reviews from the Seedly Community.

Till then, I’ll see you in the next one!

All GIF Source: GIPHY

About Cherie Tan

Turning finance into boba-sized pieces. One iced milk boba tea, please!

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