Maximizing the use of your Savings Account

When I was a banker we would be happy to see if a customer put a lot of their money in the savings account. This is because the more money we have in the form of savings account, the more money we have in the category of “cheap money” where the bank can use this type of money to give out loans at a much higher rates. For example if the loan rate is 7% and the savings rate is a flat 1% then the bank is making a 6% gross profit! Imagine if there is a deposit of RM1 billion and therefore the bank will make a cool RM600 million gross profit from your deposits.

Therefore it is much wiser if you use your savings account just for your daily transactions and never ever use it for your investment purposes. As you should already know how much you are going to use for paying bills and expenses you can easily set aside an amount to put in FD or under investment assets such as ASB, unit trust or others.

As an example, just look at the rate that Maybank and CIMB are paying for Savings account.

Balance

Nominal Interest rate

Up to RM 1,000

0.20

Up to RM 5,000

0.40

Up to RM 25,000

0.50

Up to RM 50,000

0.85

Up to RM 100,000

1.50

Above RM 100,000

2.00

CIMB Bank’ Savings rates

 

 

Balance

Nominal Interest rate

Up to RM 2,000

0.20

Up to RM 10,000

0.30

Up to RM 50,000

0.80

Up to RM 100,000

1.10

Up to RM 100,000

1.20

Up to RM 500,000

1.30

Above RM 500,000

1.51

Maybank’s Savings rates.

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