In Singapore, we are spoilt for choice when it comes to selecting a bank to establish a banking relationship with. Among local banks, DBS, OCBC, and UOB are already ranked as the biggest banks in Southeast Asia. If we wish, we can also establish a banking relationship with the many foreign banks that have a retail banking license in Singapore.
For many of us, the primary banking service that we would need is a savings account. This is where our savings are kept safe, and we can withdraw the cash we need from an ATM. We can also fund our investments, make online payments, and conduct fund transfers from our savings accounts.
For some people, having just one savings account is sufficient because as long as their savings are safe and they have access to all the banking-related transactions that need to be made (both offline and online), it’s good enough. The viewpoint is that maintaining multiple bank accounts is unnecessary, as all three local banks would offer homogeneous services, including ATM cash withdrawals, NETS payments, salary crediting, and internet banking services.
In this article, we will elaborate on why we think it makes financial sense to have savings accounts with multiple banks, even if we think we don’t always need it.
Enjoy Higher SDIC Protection
The Deposit Insurance Scheme helps protect the core savings of small depositors in Singapore in the event a full bank or finance company fails. Currently, the Deposit Insurance (DI) Scheme in Singapore insures the deposits of member banks up to a maximum of $100,000 per depositor per bank. All full banks and finance companies in Singapore, including our three local banks, are members of the Deposit Insurance (DI) Scheme, except those exempted by the Monetary Authority of Singapore.
Since the coverage is $100,000 per depositor per bank, what this means is that we can enjoy higher overall coverage if we have deposits with multiple banks. For example, if we have deposits held with the three local banks, the total coverage we are getting would be $300,000. If we only hold our deposits with one local bank, then the scope of the coverage is limited to just $100,000.
Reduce The Risk Of Losing All Your Money To A Banking-Related Scam
Banking-related scams are becoming common in Singapore, and unfortunately, there have also been many victims in Singapore who have lost their savings in some of these banking scams. In the event that we also become victims of these scams, having our savings spread across multiple banks would mitigate the risk of losing a large sum of money. If we only have one savings account, then we could easily lose all our money if that account gets hacked by a scammer.
That said, it’s worth stressing that we should always be taking great precautions when it comes to safeguarding the security of our banking access. If we have accounts with different banks, we would likely also have multiple internet banking logins and apps. We must ensure that we protect all our bank accounts from hackers.
Enjoy Access To A Variety Of Banking Services When It’s Needed
If we are making cashless payments, we (and the merchants) rely on the service network provided by the banks. Unfortunately, if the network goes down, our payment will not go through.
For me personally, there was an occasion earlier this year when I bought my food and wanted to make a payment. After two failed attempts of trying to pay, I switched to a different payment method with a different bank and the payment went through. I later found out that the bank I originally wanted to pay through suffered an outage during that period.
If I did not have an alternate savings account that I could also pay through, I would have had to endure the inconvenience of needing to borrow money from a colleague to pay for my meal.
Read Also: Best Savings Account For Salary Crediting Only (For A Minimalist Banking Lifestyle)
Enjoy Bank-Exclusive Promotions
Beyond just credit cards, banks also offer special promotions if we pay using a particular banking app or payment method that the bank has. This may require us to have a savings account for the funds to be deducted from to enjoy the promotion. By having savings accounts with multiple banks, we get to enjoy a wider range of bank-exclusive promotions.
We Can’t Pool Our Savings To Enjoy Higher Interest Rates
One downside to having savings accounts with multiple banks is that we don’t pool our savings together to enjoy higher interest rates from a high-interest savings account, especially if we are already trying hard to meet all the various criteria required to earn bonus interest.
Of course, if we have already reached the maximum amount of savings for which we can earn high interest, then this is no longer an issue. In fact, that would act as the impetus for us to get another savings account with a different bank so that we can continue to earn higher interest on the rest of our savings.
Read Also: Why SMEs Should Consider Having Dedicated Business Bank Accounts
This article was first published on 28 November 2023 and was updated to reflect the latest information.
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