The Hidden Cost of Holding onto Your First Savings Account
Most of us opened our first savings account with the bank when we were young, lugging our piggy banks to the actual bank to open an account with our parents or grandparents.
Some of us are still holding onto our first savings account that we had since we were a kid, Got to admit, that’s me and it is the legendary POSBkids Account.
(Editor’s Note: We are not sponsored to write this, neither are we in any collaboration. I personally still hold onto my POSBkids account and I am curious how much I am missing out.) 🤔
Our First Savings Account
Even if it is not POSBkids account, it would most probably be a kid’s account too but in another bank.
- 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.
Pretty sure you have outgrown these benefits and they no longer apply to you, and they started charging you $2/month for not keeping your account above $500. How many of us 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 yielding 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: $3,500 (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 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:
CIMB FastSaver is offering 1% for a minimum deposit of $1,000 with no fall-below fee.
How does 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.
|CIMB Fast Saver|
- After the 5th year, you can go for all funded trip to Thailand.
- After the 10th year, you would be able to fly to Osaka!
Why are we throwing such opportunities away?
Now, how does 1.95% more look like?
With the same amount of savings of $10,000 as above, here is the difference if you have DBS Multiplier as your savings account as compared to your first savings account.
DBS Multiplier (2%) DIFFERENCE
1st Year 10,005 10,200 195
2nd Year 10,010 10,404 394
5th Year 10,025.03 11,040.81 1,015.78
10th Year 10,050.11 12,189.94 2,139.83
Or you can go take the difference after the 10th year and go on a return trip to Iceland! Do all influencer personalities do that? Is that how they afford all their holiday trips?You can beat the approximate inflation rate of 1.9% by leaving your money in a higher yielding DBS Multiplier.
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!
Check out our blog for more unbiased opinions on your personal finance journey.