UOB slashes One savings account interest rates from May 1

UOB : U11 0% is introducing lower interest rates for its One savings account members ahead of anticipated rate cuts by the US Federal Reserve.

In a Monday (Apr 1) letter addressed to its One Account customers seen by The Business Times, the bank cited a need to “align with long-term interest rate environment expectations”.

The reduced interest rates will come into effect on May 1, and are applicable to all new and existing UOB One accounts.

They will apply to account balances between S$30,000 and S$100,000, and when customers spend at least S$500 a month on an eligible UOB card and credit their salary of over S$1,600 via Giro.

In all, the revised tiered bonus interest rates will range from 3 to 4.5 per cent, as opposed to the current 3.85 to 7.8 per cent for customers who meet all the above criteria.

They will now stand to earn a lower maximum bonus 3 per cent interest per annum on the first S$30,000 balance in their account, versus 3.85 per cent currently.

The revised 3 per cent interest rate ceiling also applies to the next S$30,000, down from the current 3.9 per cent, and the subsequent S$15,000, which is presently pegged to 4.85 per cent. 

A maximum 4.5 per cent rate will be applicable for the next S$25,000. This is markedly lower than the current 7.8 per cent earnable.

UOB, however, introduced two tiered bonus interest rates on top of the existing base rate of 0.05 per cent. 

For the next S$25,000 after the S$75,000 balance mark, UOB One account holders will now earn a 4.5 per cent interest and another 6 per cent for the subsequent S$25,000.

This will allow customers to earn higher interest in total, said the bank.

“With these changes, you can now earn up to S$6,000 total interest in a year for deposits of S$150,000 when you spend a minimum of S$500 on eligible UOB cards and credit your salary via Giro/PayNow each calendar month.”

UOB in late 2022 raised its interest rates on the flagship savings account, following similar moves by its rivals DBS and OCBC.

Its revised interest rates at the time, capped at 7.8 per cent, offered the highest maximum bonus interest rates among the three local lenders.

Last week, Chicago Fed president Austan Goolsbee said he penciled in three rate cuts for 2024, in line with the median estimate for interest rate reductions that policymakers projected for the year.

At the last policy meeting, the US central bank kept its benchmark overnight lending rate in a target range of 5.25 to 5.5 per cent.