In this issue we are going to turn the spotlight on one of that most underrated of financial tools, the humble Savings Account. However, as we are going to explore the humble savings account has gone through numerous evolutionary hoops and has morphed into something much more attractive.

Today’s Savings Accounts

Current day Savings Accounts are the sophisticated descendants of their simpler ancestors. They enable numerous facilities like a Debit Card with which to withdraw money from ATMs and pay for your shopping, phone, Internet and mobile banking, e-statements, alerts and advices, bill payments, funds transfers etc. that make everyday banking a breeze.

There are also newer variants of savings accounts that come with certain unique features. Let’s check out a few examples:

The welcome bonus S$200 with 2.5% p.a interest rate when you establish a Citibank InterestPlus Savings Account with a Citi Priority relationship.

The Bonus+ Savings Account from OCBC offers a base interest of 0.05% and an interest rate of 0.80% if no withdrawals are made from the account in a month.

DBS Multiplier Programme rewards you for regularly using your account. The more you use your account for transactions, the higher the interest you shall receive. If your banking transactions add up to S$7,500 a month then, you are eligible for an interest of up to 2.08% depending upon a tiered structure.

Before you opt for such products, make sure that you have a thorough understanding of the features involved and the product actually fits your requirements.

Gold and Silver Savings Accounts

Gold Savings Accounts (GSA) or a Silver Savings Accounts (SSA) enable a customer to buy and sell gold or silver without physical delivery. Your account balance will be in terms of the gold or silver held in the account. Gold and silver can be bought or sold (without physical delivery) from the branches of the account holding bank or via the online or mobile platforms provided by the bank.

Holdings of gold and silver are usually recorded in grams (for gold) or ounces (for silver) and purchased quantities are credited to the holdings account and sold quantities are debited from the holdings account. Banks usually stipulate a minimum amount that needs to be bought or sold per transaction.

You can also use the Ordinary Account Balance and the Special Account Balance (from 1 July 2010, only monies in excess of $20,000 in the Ordinary Account and $40,000 in the Special Account can be invested) in your Central Provident Fund account to invest in gold via Gold Savings Accounts subject to the bank’s rules and the rules of the CPF investment scheme.

Such investors will not be given a GSA passbook. Your gold holdings will be reflected in your CPF Investment Account monthly statement. CPF funds cannot be used for investment in Silver Savings Accounts as SSA is not one of the products allowed by the CPF Investment Scheme.

Gold and Silver Savings Accounts generally do not accord any interest. Holdings in Gold and Silver Savings Accounts are generally not transferable and can only be sold through the respective bank’s platforms.

You get to hold gold / silver without the worries or hassles experienced in storing and safeguarding physical gold and silver. Your holdings in Gold or Silver Savings Accounts help you to diversify your portfolio. Gold and silver holdings also help act as a hedge against a range of economic, political and financial uncertainties. Gold and silver account holdings are also not subject to Singapore’s Goods and Services Tax (GST).

Multi-Currency Savings Accounts

Multi-currency savings accounts enable you to deposit and withdraw cash in a number of currencies (enabled on this account). In other words, as a multi-currency account holder you can hold cash in multiple currencies within a single account. You can deposit cash in any of the currencies enabled on this account; while withdrawing, you will need to specify the currency in which you wish to withdraw.

You can deposit or receive foreign currency directly into your multi-currency account. You can easily move money between currencies. You can also make savings on exchange conversion fees when transacting in, including sending money overseas, any of the currencies enabled on the account.

Most multi-currency savings accounts do pay interest on the deposit balances. Products like Citibank Global Foreign/Multi Currency Savings Account (up to 9 different currencies – Australian Dollar, New Zealand Dollar, Sterling Pound, Canadian Dollar, Hong Kong Dollar and US Dollars.) provide a tiered interest earning rate depending upon the deposit amount available in that currency; interest rates also vary according to currency.

Islamic Savings Accounts

These accounts are financial products that comply with the laws of the Shariah. If you are opting for an Islamic Savings Account you should remember that the Shariah specifically forbids interest and such accounts do not pay interest although banks at their discretion may credit “Hibah” or a token / gift to such accounts periodically. The Savings Account-i and Ar Rihla Regular Savings Account-i from Maybank Singapore and the CIMB StarSaver (Savings)-i Account are examples of Islamic savings accounts.