Tuesday, May 12, 2015

CIMB 18-Month Step-Up Fixed Deposit

So, CIMB has relaunched their step-up fixed deposits again! Actually, last year I wanted to open up a CIMB StarSaver account and also consider a their 1-year or 5-year step-up fixed deposit, but they removed the promotion by the time I wanted to get to it!

Anyway, they are back with a step-up, but obviously the difference now is the time frame.

Previously, their 1-year step-up deposit had an EIR of 1.06%
Now, their 18-month step-up has an EIR of 1.39%.
Which is pretty sick since their previous 5-year step-up was only 1.56%.

So, the EIR is 1.39%, or 1.388% to be more exact, which I have calculated and did the sums in the table below:

So, 1.39% for an 18 month step-up fixed deposit is not too shabby. From memory and what I see now, banks are offering rates between 1.1 - 1.4% for regular Joes like us to have a 1-year fixed deposit with them.

Even though the yield might be higher with other banks, I think that the flexibility to withdraw monthly and still keep the accumulated interest accrued so far is a huge factor for me. I personally like my cash-like assets to be.... cash-like, meaning that I can liquidate them relatively quickly and easy without penalties.

Basically, you are paying up a premium to have the option to withdraw your deposit without interest penalty. I'm willing to pay that price.

Personally, I have yet to max out my OCBC 360 account which is yielding 2.25% on my deposit now, and the Singapore Savings Bond has yet to be officially launched, but opening up a CIMB StarSaver account and taking up an 18-month fixed deposit with them in my possible next move. Really not sure if I will do this, or the SSB. Perhaps a split between both?

The current "yield" of this fixed deposit is 1.39%, which equates to about 3.5 years of the Singapore Savings Bond. If you forsee that you'll be opening up your warchest within the next 3.5 years, it might be better to roll your fixed deposits than to dump it all in the SSB. The SSB isn't the holy grail of fixed deposits. It is a completely different product, though it is somewhat similar. Don't make the mistake to confuse the 2 as the same thing.

Unlike their WealthSaver product, this is actually something I would have no qualms taking up myself, as well as recommending to family and friends.

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