Current Account, Savings Account (CASA) Singapore: Complete 2019 Guide

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CASA Guide | SingSaver

It goes without saying that every salaried worker should have a few important things in place before they start striving for their financial or even, personal goals.

An important way to get to your financial milestones is the type of banking accounts you choose to get, with major differences being a savings account, current account.

Savings Accounts vs Current Accounts

SavingsCurrent
Earn higher interestInterest not as high
Requires a maintainence of pre-specified sum (i.e. fall-below fees)Convenient for frequent transactions (i.e. companies, organizations and entrepreneurs)
Low minimum balance requiredHigh minimum balance required 
High liquidity compared to other investment instruments (fixed deposits, cashNot considered as an investment instrument
Automatic withdrawals and GIRO deductions for recurring transactionsCapability to handle large volumes of receipts and/or payments

Overdraft or short-term borrowing possible 

What is the best bank account for me?

The best bank account for you depends on your purpose for it and your life stage (studying, working or parenting).

Read more: How To Pick A Savings Account (When They All Look The Same)

What is a savings account?

A savings account is an interest-bearing deposit account held at a bank or other financial institution that provides a modest interest rate. The financial institution may limit the number of withdrawals from your savings account each month. They may charge fees unless you maintain a certain average monthly balance in the account. In most cases, banks do not provide cheques with savings account.

A student may need a savings account for:

  • Money transfers
  • Debit purchases or expenses
  • Access to mobile payment services

The ideal savings account for a student is one with no or low minimum initial deposit, low monthly fall-below fee, reasonable base interest or step-up interest that can make savings grow. 

It’s also important to consider other factors like how you will use your savings account, the amount of cash you will hold inside and frequency of fund transactions as this may influence the type of savings account you get for yourself.

Read more: 7 Good Reasons To Change Your Savings Account

Alternatively, a working professional may need a savings account for:

  • Salary credit
  • Bills payment
  • Credit card spending
  • Insurance or investment purchases

If you need a bank account for transaction purposes such as bills payment or money transfer to customers or suppliers, open a current account. 

Of course, there are other bank accounts that exist too, such as multi-currency accounts and fixed deposit accounts.

Read more: The Differences Between Bank Account Types That You Need To Know.

Calculating Interest

The one factor you should pay attention to is the amount of interest in your bank. And how that is earned depends on whether your account clocks simple interest or compound interest.

What is simple interest?

Simple interest is an easy method of computing the interest income on a savings account. Simple interest = principal deposit X daily interest rate X number of days that elapsed.

What is compound interest?

Compound interest earns you interest on the money you deposit, as well as on the interest you have already earned — so you earn interest on interest. An online savings account paying monthly interest is an example of an account that earns compound interest. The longer you let your savings accumulate without withdrawing, the greater the compound interest earned.

What is the effect of compounding interest?

The interest-on-interest effect of compounding interest generates increasingly positive returns based on the initial principal amount.

$10,000 deposit at 5% compound interest rate

YearOpening BalanceCompound Interest Earned (5%)Closing Balance
1$10,000$500.00$10,500.00
2$10,500$525.00$11,025.00
3$11,025$551.25$11,576.25
Compound Interest Earned$1,576.25

Using the table above, $10,000 deposited into a savings account with 5% compound interest rate will earn total interest of $1,576 over three years.

In Year 1, a deposit of $10,000 at 5% interest rate will earn an interest of $500. If no money is withdrawn, the closing balance of Year 1 will be $10,500 ($10,000 principal amount + $500 interest).

In Year 2 however, interest at the same 5% compound interest rate will earn $525 interest based on the new balance of $10,500. At the end of Year 2, the closing balance will be $11,025 ($10,500 principal amount + $525 interest).

In Year 3, interest at the same 5% compound interest rate will earn $551.25 interest based on the new balance of $11,025.

$10,000 deposit at 5% simple interest rate

YearOpening balance Simple Interest Earned (5%)Closing Balance
1$10,000.00$500$10,500
2$10,000.00$500$10,500
3$10,000.00$500$10,500
Compound Interest Earned$1,500

Since compound interest takes the accumulated interest of previous periods, the interest amount is not the same for all three years as it will be with simple interest.

In this above chart, the principal amount of $10,000 earns a regular $500 interest a year. After 3 years, the total interest earned would be $1,500. But a compounded interest would have earned an extra $76.25 ($1,576.25 – $1,500)

When computing compound interest, the number of compounding periods (in this case, the 3 years in question) makes a significant difference. The higher the number of compounding periods, the greater the amount of compound interest.

How do you open a bank account in Singapore?

Singaporean and permanent residents will be required to submit the front and back of NRIC (if applicable), and the latest copy (last 3 months) of any of the items below as Proof of Residential Address (where applicable).

  • Local utility bill
  • Local telecommunication bill
  • Local bank statement/credit card statement
  • Letter issued by government of other public bodies regulated for AML practices in a FATF member country
  • Letter from regulated insurance companies in a FATF member country
  • Letter from school (restricted to official letters from educational institutions or schools under the purview of Council for Private Education or Ministry of Education)

Foreigners working in Singapore will be required to submit their passport, employment pass and the latest copy (last 3 months) of any of the items below as Proof of Residential Address (where applicable).

  • In Principal Approval (IPA) issued by the Ministry of Manpower
  • Work permit of foreign domestic workers (domestic helper) issued by the Ministry of Manpower
  • Letter of offer
  • Letter of employment
  • Latest payslip
  • Local utility bill
  • Local telecommunication bill
  • Local bank statement/credit card statement
  • Letter issued by government of other public bodies regulated for AML practices in a FATF member country
  • Letter from regulated insurance companies in a FATF member country
  • Letter from school (restricted to official letters from educational institutions or schools under the purview of Council for Private Education or Ministry of Education)

Can I open a bank account online or in person?

Even if you are residing overseas, you can open a bank account in Singapore through the online facility of your chosen bank. After you have submitted an online application, a bank officer will contact you to assist you on the account opening process. 

How much do you need to open a bank account?

Although some banks do not require any minimum initial deposit, most banks impose a different minimum initial deposit requirement to open and maintain a bank account and different Monthly Average Balance (MAB) for a bank account to start earning base interest (e.g. DBS Multiplier Account and Standard Chartered Bank Bonus$aver Account). To qualify to open a priority banking account requires several hundred thousand dollars in assets under management (AUM). For example, to qualify for DBS Treasures priority banking, minimum AUM required is $300,000.

What are the benefits of having a bank account in Singapore?

Singapore is known as a regional financial hub in Asia due to its stable and strong economy which makes it the preferred location to diversify investments, including those searching for higher yields if the interest rates in their home country are low.

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