Earn up to 1% p.a. Interest on New UOB Stash Account - Maximum EAR of 0.825%?
Following the rather controversial launch of the KrisFlyer UOB Savings Account back in April 2017, UOB has announced a brand new UOB Stash Account (essentially a savings account) which offers the opportunity to earn up to 1% p.a. interest. Account holders will essentially earn 0.05% p.a. interest on the whole account balance with the opportunity to earn a bonus interest (of up to 0.95% p.a.) if the Monthly Average Balance (MAB) is equal to or higher than the previous month.
Photo Credit: UOB
UOB has done a fairly good job at explaining how the UOB Stash Account works - you essentially earn a base interest of 0.05% for the entire account balance and you will be able to earn up to 0.95% p.a. bonus interest for account balances between S$50,000 to S$100,00. In this article, I will show you why an account balance greater than S$100,000 make zero sense but more importantly, the Effective Annual Interest Rate (EAR) that you can get out of this account is only 0.825% p.a. (and not the advertised 1% p.a.).
Photo Credit: UOB
As you can see in the table above, the bonus interest is only applicable to anything in excess of S$10,000 but under S$100,000 - outside of these boundaries, you will only enjoy a base interest of 0.05%. For the sake of simplicity and illustration, assume a scenario where a customer goes ahead and open a UOB Stash Account with S$20,000 - he then maintains this sum constant (therefore maintaining the MAB) over the whole of next year. This is how the interest breakdown would look like after a year:
- First S$10,000 at 0.05% = S$5
- Next S$10,000 at 0.80% = S$80
- Total Annual Interest = S$85 (EAR = 0.425%)
Effective Annual Rate (%) on UOB Stash Account
What I have done is basically plot what the EAR is at S$10,000 intervals - the EAR peaks at 0.825% when your balance is at S$100,000 and then falls significantly with every additional dollar that you have above S$100,000. Don't get me wrong though - the absolute amount of interest (in SGD) is definitely going to be higher when you have a great account balance (i.e. an account with S$200k is going to make more interest than an account with S$100k) but the EAR decreases as the account balance increases after S$100,000 which therefore makes the sweet spot at S$100,000.
Photo Credit: UOB
With that being said, is it worthwhile to essentially park S$100,000 of your money with the UOB Stash Account for S$825 interest? If you have it lying in a miserable account somewhere that pays you only 0.05% p.a. interest, this is definitely a step up from that. However, you are much better off with accounts like the OCBC 360 Account or the Standard Chartered Bonus Saver Account which offers a much more lucrative rate. Besides, why would you stash your money (pun intended) with UOB when the CIMB FastSaver offers you 1.0% p.a. interest on your very first dollar (up to S$50,000)?
While seasoned miles chasers often look to foreign carriers for significant cost savings and sweet spots, Singapore Airlines KrisFlyer remains the undisputed default for the vast majority of Singaporeans. From the sheer number of credit card transfer partners to the preference for direct flights over stopovers, KrisFlyer is the Ya Kun of the miles game.