By Jessica Wee

One of the easiest ways to ensure all your money is working for you is to leave no penny behind! The most overlooked area is usually the cash-at-hand that you leave in your current or savings accounts (aka CASA in banking lingo) which you may need to utilise for on-going expenses.

Gone are the days of personal cheque books, although some oldies or people in the UK still use them. I would laugh at it being an obsolete financial instrument which we still have to pay stamp duty to use as compared to free-to-use online transfers/e-wallets. However, it is still a good way for non-techies to keep account of their bigger expenditure. 

So, do you need a current account? There is no real purpose for an Average Joe unless you’re running a business that has many transactions. For me, a savings account is all I need to run my daily expenses and therefore, let’s explore the topic of high interest savings accounts!

When you should use a high interest savings account as part of your overall portfolio

A high-yield savings account should make up only a part of your overall financial portfolio. Consider how you’ll best use the account to complement your other savings and investment strategies and from there determine how much cash you think is prudent to keep liquid for your particular situation.

  1. To store your emergency fund. We recommend saving up to six months worth of living expenses.
  2. Saving up for a large purchase, such as a house, a car, or a big vacation, which you’ll make payment within the next five years. During that time, it’s best not to put the funds into investments that could lose their value. So periodically putting funds away in a high-paying savings account can help you protect your principal while applying interest earnings to your savings goal.
  3. For no specific purpose but simply to house surplus cash. Since current account interest rates are generally minuscule or zero, moving extra funds into savings when you don’t need them to cover day-to-day transactions can provide a monthly interest payment you wouldn’t otherwise earn.
  4. Goal oriented savings account. Some banks allow you to open more than one savings account and even give them personalized nicknames (e.g., Car Fund, Vacation 2020, etc.). Or you can open a high-yield savings account at more than one top-paying institution. Multiple savings accounts can facilitate easy tracking of your progress toward goals and make it simpler to keep your hands off money you don’t want to touch, such as your emergency fund. For this to work to your advantage, always check if there is a step-up or flat interest rate being offered. If it is a step-up interest rate, you’re still better off accumulating all your savings into 1 account.

In Malaysia, some banks adopt the general concept of “Save, Pay, Spend” i.e. making at least 3 retail transactions on your debit card or depositing a certain amount of money each month.

It is a way to contain the customer within their universe and make more money off your credit card purchases and/ or encourage you to take on their loan(s). Although the brains behind these marketing/business development strategy justifies it as being easy to achieve – I feel it is an insincere way to retain a bank customer. 

Besides these requirements that require you to spend money, a high interest savings account may not be a feasible choice if you’re planning to grow your savings. I would steer away from an indecent proposal!

Here is a summary I have put together from some banks and other financial institutions.

Please note that only BANKS have a PIDM guarantee of up to RM250k in deposits.

A high-yield savings account can be a useful middle ground for your money, offering protection of your principal, the safety of federal insurance, and a yield that’s higher than a regular savings account though less than you could potentially earn from riskier investments. Just be sure to think through how one or more high interest saving accounts can best serve your financial goals and situation. Then, do your homework to find an account that will maximize your earnings at the same time that it lets you avoid fees without imposing restrictions that don’t fit your needs.


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