Should One Keep Monies in Savings Account?
For the past couple of years, or rather, for as long as I know, the interest rates for savings accounts have been pittance, to say the least - hovering around 1.5 to 3.0%. I won’t say it actually motivates people to want to put their money in savings accounts but people do it for convenience. Given a choice, people would rather put their monies in fixed deposits or other forms of monetary investments for eg. unit trusts or bonds.
Amongst new types of bank accounts available in the market nowadays are what is known as hybrid accounts - which is basically a loan and savings account in one. Whilst it does not pay you interest for your monies deposited in that account, it does reduce the amount of daily interest that you are paying to finance the loan that you have taken. It is advantageous to the borrower as the amount of interest on a loan is usually about 3 times higher than the amount of interest which one can earn through a conventional savings account. Thus, early this year, I decided to refinance my housing loan from the old monthly rest interest calculation basis to a hybrid account with an international bank. It is also advantageous to the banks because when the borrower deposits and keeps the extra monies in the said account, the banks would have additional funds at hand.
What I would be most interested in is whether banks would introduce business bank accounts based on the hybrid account described above. It is not uncommon for companies to take up loans to finance their business ventures and it would be interesting to see whether these type of hybrid accounts would be available (if not yet available). If it works for the personal accounts, I don’t see why it should not work for commercial accounts.
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