There are many banks in the Philippines that offer savings accounts to customers. But do you know which ones are considered the best among the rest?
After all, choosing a bank account to open and keep is crucial as you wouldn’t want to miss the opportunity to earn passive income.
In this article, I am going to discuss about how a high-yield savings account can be an investment that is worth considering.
What is a savings account?
A savings account is a basic account offered by banks, coops, and other financial institutions.
It’s where you can deposit money to be kept safely and that you can withdraw anytime.
Plus, it is insured by the Philippine Deposit Insurance Corporation (PDIC) up to half a million pesos and earns modest interest over time.
Purpose of a savings account
A savings account in the Philippines is good for spare cash that you don’t need to spend for everyday expenses.
It can also be used in building your emergency fund. Because it earns interest, it’s the easiest form of passive income and investment.
It’s also a better alternative to piggy banks where your money doesn’t earn interest and may be subject to wear and tear.
Also, very old bills can’t be used for exchange anymore. Besides, the bank gives an ATM card which you can bring with you just in case you need to withdraw funds instead of always carrying bills.
However, the downside is that you may be tempted to spend your savings because it’s easily accessible.
Also, the interest is small that whatever you gained isn’t enough to counter inflation. Over time, your money’s worth is eroded.
It isn’t really a great way to save your money for long term or to preserve the value of your money over time.
Lastly, there are savings accounts for kids exclusively. They offer comparable rates and may even come with perks, insurance, or educational benefits.
Benefits of a savings account
The savings accounts provide many advantages to depositors.
- Small initial balance. You don’t have to put up millions just to open an account. Banks can let you start with at least ₱500. Be sure to check the requirements ahead of time.
- Low maintaining balance. Depending on where you deposited, it’s usually the rule that you are allowed to have small balance to keep without getting charged for any fees.
- Low maintaining balance to earn interest. Interest is earned when you reach or keep to maintain a certain level of deposit. What’s so good about this is that the interest can be credited every three months. So, your money doesn’t just lie idle. Its value actually grows.
- Easy. Opening an account is relatively easy. Banks would usually give you a set of instructions and a list of papers to prepare, which are actually easy to secure.
- Safekeeping. Another benefit of having a savings account is that the bank keeps your money secure. It does so by honoring the deposit you’ve made and ensuring you get it back plus any earnings whenever you need it.
- Exchange. When you set aside money in a piggy bank for a very long time, chances are bills become retired and are no longer accepted in exchange for goods and services. The bank eliminates that problem by ensuring that you are only given current bills issued by the Bangko Sentral ng Pilipinas.
- Liquid. Bank accounts are liquid in the sense that you can withdraw and get your money almost immediately.
- Convenient. Transactions such as opening account, making a deposit, and doing a withdrawal are made convenient through availability of support in physical branch, email, phone or online access.
- Interest. Your money earns interest. It may be modest for some, but it gains an actual interest, which is not possible if you stack cash in a physical place.
- Insured money. Because of the Philippine Deposit Insurance Company, half a million worth deposit is secured. If and when the bank goes under, you can still claim your money.
- Financial goals. It can be a financial vehicle for your financial goals. It’s a good way to accumulate your savings especially when you’re about to make a big-time purchase.
- Bank services. By having an account, you may be given access to other useful services and perks. For instance, your ATM card may be used to purchase items, book trips online, or pay cashless for your groceries.
Features of a savings account
A typical savings account has the following features:
- Interest. It earns interest which is paid usually every three months.
- Initial deposit. This is the minimum money to open an account. There are accounts that don’t require any initial deposit.
- Maintaining balance. It’s the balance that must remain in the account. When the balance falls lower than that, there may be fees.
- Required balance to earn interest. Some savings account will only give you interest if you meet the required level of deposit.
- Withholding tax. The interest you earned is subject to 20% tax, although some accounts waive it when certain conditions are met.
In addition, fees may be charged on the following situations:
- withdrawing funds, from other branches, other banks, over the counter (for ATM accounts), or within specific period of time (like the first 30 days)
- making deposits in another branch
- lost passbook or ATM card
- balance falling below the required maintaining balance
- dormant account
In the Philippines, savings accounts are insured. That’s why they are considered safe and risk-free.
Up to half a million pesos worth of deposits and accounts are protected from any crisis that might hit the bank that you have business with.
So how does PDIC protect your money? When a bank gets bankrupt, PDIC steps in to make sure that depositors get their money back.
For as long as your total deposits and accounts are equal or less than half a million pesos, you know that your cash is in good hands.
What accounts are insured?
According to PDIC, the following are insured: savings, special savings, demand/checking, negotiable order of withdrawal, negotiable/non-negotiable certificate of time deposits.
Insured amount is extended to single account, joint account and account in trust for (ITF) another person. The accounts can either be in peso or dollar denomination.
Best high-interest savings accounts in the Philippines
Here are the top 10 high-yield savings accounts in the Philippines with the latest interest rates ranked from highest to lowest.
Now, let’s compare these accounts. Let’s check how much earnings you would get after a year and after 10 years, before taxes.
If you look at the picture, you’ll see that some of the accounts require minimum opening balance of P100K. In our projection, we’re going to use this amount to compute for gained interest.
|NAME||INTEREST||AFTER 1 YEAR|
|ING Savings Account||2.5%||2,500.00|
|GSave by CIMB Phlippines||2.6%||2,600.00|
|Citibank Peso Bonus Saver Account||1.66%||1,660.00|
|BDO Optimum Savings Account||1.25%||1,250.00|
|Security Bank eSecure Savings Account||0.70%||700.00|
|BPI Family Savings Bank Advance Savings Account with Passbook||0.625%||625.00|
|Security Bank Premium Build Up Savings Account||0.074%||74.50|
|Sterling Bank of Asia Bayani OFW Savings Account||1.00%||1000.00|
|Citibank e-Savings Account||0.75%||750.00|
|BPI Advance Savings account with Passbook||0.0625%||62.50|
|Citibank Peso High Rate Saver||0.70%||700.00|
|Equicom ATM Savings Account||0.125%||125.00|
You don’t have to worry if you don’t have P100K right now. What this comparison shows is the growth of your money over time using the same deposit amount. In this way, we make sure that we compare apples to apples.
As you can see, it’s clear that the interest the banks give can make a huge difference on how much you’re going to earn in a year or in a decade. The GSave by GSave gives P2,600 after a year, while the lowest one only gives P74.50. That’s over 40x the difference.
Likewise, after a decade, Citibank gives out P26,000.00 of interest while the last on the list only gives P625.00. This means you’re going to miss a lot just by the choice of banking product.
Below is a summary of all the products reviewed in this article. You can click on each to be directed to the discussion point, which will conclude with a forecast of your savings.
CIMB Bank GSave
The GSave account from CIMB Bank currently earns 2.6% per year on a maximum cumulative deposit of ₱50,000. The interest is credited to the account at the end of the month.
You must at least be 18 years old, a holder of at least government-issued valid identification card, and a verified GCash user.
The account however has a validity of only one year. If you wish to continue beyond the validity and deposit over the maximum amount, you need to download the CIMB Bank app and link your GSave account.
In addition, there is a free life insurance equal to 1x of the average daily balance of the past three months or 1x the last recorded balance before death date. The insurance amount is up to ₱1 million.
- Initial deposit: Any amount
- Balance to earn interest: Any amount
- Interest: 2.6%
The table below shows estimate for a GSave account that no longer as limits on amount and validity.
CITIBANK Peso Bonus Saver Account
The CITIBANK Peso Bonus Saver Account is an interest-bearing deposit account that allows you to earn bonus interest if you save up more each month. Now, that’s a better way to encourage everyone to save.
Additionally, you’re able to withdraw your money free of charge and for unlimited times.
- Initial deposit: P50,000
- Balance to earn interest: P50,000
- Interest: 0.60% to 1.66%
The base interest is 0.60% for required balance of P50,000. You will be rewarded with a bonus of 0.08% if your balance increases by P5,000 the next succeeding months, with a cap of 1.66%.
The interest goes back to 0.60% if there is no increase on balance, or you may enjoy earning interest of 1.08% if you were able to increase P5,000 consistently each month for six months in the past and the balance is less than P4 million. And if your balance is P4 million or higher, you get to earn the maximum interest of 1.66%.
Here’s the fun part. Let’s say you want to start a Citibank Peso Bonus Saver Account, but you want to know how much you need to save to have P1 million after 10 years.
The strategy is to save P50,000 on the first month and then save P5,000 for each of the remaining 11 months on the first year. Then, starting on the second year and onward, you need to save at least P7,710.48 monthly. (In the table, Year-End means the amount you’ve saved after the year ends. The Balance column includes the interest you’ve earned for that year.)
BDO Optimum Savings Account
The Optimum Savings Account is an offering from BDO Unibank Inc. that gives savers higher interest rates as they deposit more money. The account allows withdrawal up to three times a month free of charge.
- Interest: 1.25%
- Initial deposit: P30,000
- Balance to earn interest: P30,000
The following fees are assessed:
- P300 for closing the account within the first 30 days
- P300 for falling below the maintaining minimum average daily balance
- P30 for accounts that became dormant for five years.
- P110 for withdrawing money more than three times in a month.
Wondering how much to save each month if you open a BDO Optimum Savings Account?
Considering that the deposit will earn 1.25% interest, you would need to save P7,914.23 each month to have a million pesos at the end of 10 years. Here’s how that would look like.
Security Bank eSecure Savings Account
Security Bank Corporation’s eSecure Savings Account gives a tiered interest rate depending on your balance. The higher your savings, the higher interest you enjoy.
- Interest: up to 0.70%
- Initial deposit: P500
- Balance to earn interest: P5,000
Also, the account only requires P500 as initial deposit, with P5,000 already earning starting interest of 0.70%. The only drawback is that you’re only allowed one withdrawal per month or else interest becomes 0.10%.
Should you want to start saving gradually for a million pesos, the strategy is to deposit P100,000. In this way, your account earns 1.10%. Then, you can save P7,149.62 monthly for 10 years. The projection in the table shows just how your funds would grow over the years.
BPI Family Savings Bank Advance Savings Account with Passbook
The Advance Savings Account with Passbook from Bank of the Philippine Islands (BPI) Family Savings Bank allows you to have faster returns on deposit.
You can deposit your money and use the interest ahead of time. It has a higher interest rate than a regular savings account, and the interest goes up to 1.50% when balance reaches a million pesos or higher.
- Interest: 0.625%
- Initial deposit: P100,000
- Balance to earn interest: P100,000
The maintaining balance is P100,000. If the balance falls below that, the account does not earn any interest. It is also convenient to monitor the account through their online banking portal.
If you wish to save today and hope to have P1 million pesos after 10 years, you may want to put up the initial deposit of P100,000. Afterwards, you can save P7,180.96 each month. The table below shows a projection of BPI Family Savings Bank Advance Savings Account with Passbook.
Security Bank Premium Build Up Savings Account
The Premium Build Up Savings Account from Security Bank Corporation is for people who don’t want to be locked in but would still want to enjoy better interest rates than traditional savings accounts. The initial deposit starts at P50,000 with interest rate of 0.74%.
- Interest: 0.74%
- Initial deposit: P50,000
- Balance to earn interest: P50,000
However, you’re allowed three withdrawals per quarter. This account is ideal for people who would want to grow their money quicker and willing to save long-term.
The strategy to save a million pesos in 10 years is the same as the previous example. This time, the initial deposit is only P50,000, and the monthly savings is P7,588.87. Below shows how your savings will grow over time.
Sterling Bank of Asia Bayani OFW Savings
Sterling Bank of Asia Bayani OFW Savings is a type of account intended for Filipinos working abroad. It has relatively high interest rate and no required initial deposit, and it comes with an ATM card.
- Interest: 1.00%
- Initial deposit: Not required
- Balance to earn interest: P2,000
The account is ideal for people who are going to remit money from other countries as fund transfer can be credited to the account. Remittance can be done via iRemit Global offices, wire or telegraphic transfer from foreign banks.
If you’d like to grow your money with Sterling Bank of Asia Bayani OFW Savings to become a million pesos in 10 years, you would need to consistently save at least P7,996.78 every month. The table below shows the projection of your deposit.
Citibank e-Saving Account
The Citibank e-Saving Account allows you to enjoy high interest rate with the convenience of managing your account via the online portal. You’re also given free and unlimited fund transfer to other users’ other Citibank CASA.
Initial deposit: (not mentioned)
Balance to earn interest: P100,000
Enjoy free two withdrawals per month. More than three withdrawal will incur a fee of P20 for non-over the counter and P30 for over the counter withdrawal.
With Citibank e-Savings Account, you can come up with a strategy to grow your savings to become a million pesos in 10 years. For instance, you may choose to deposit P100,000 to earn interest, and then save P7,259.76 monthly for a decade as the table below shows.
BPI Advance Savings Account with Passbook
The BPI Advance Savings Account with Passbook features quick return on your deposit and a higher interest rate compared to a regular savings account. You can also earn in advance for every deposit and enjoy seamless account management through their online banking system.
- Interest: 0.0625%%
- Initial deposit: P100,000
- Balance to earn interest: P100,000
The maintaining balance is P100,000 and if the balance is a million pesos or higher, then the interest rate will be 1.25% instead of the base rate of 0.75%.
So, if you want to be a millionaire using the BPI Advance Savings Account with Passbook, you may need to put up the initial deposit of P100,000.
Afterwards, you can save P7,259.76 each for the next 10 years. The sample projection is actually the same as the previous table with Citibank e-Savings Account, so you may refer back to it.
Citibank Peso High Rate Saver Account
The Peso High Rate Saver Account from Citibank offers market-leading interest rates from 0.70% to 0.85%. The higher the balance that remains in the account, the higher the interest you’re going to earn. There are no fixed terms to worry about, balance inquiry is available in over 13,000 ATMs worldwide, and you can manage your account on their online platform.
- Interest: 0.70%
- Initial deposit: (not mentioned)
- Balance to earn interest: P100,000
With your account, you’re allowed up to two free withdrawals each month. A P20 fee is charged for non-over the counter withdrawal and P30 when withdrawal is done over the counter.
With Citibank Peso High Rate Saver Account, we can estimate your deposit to be able to have a million after a decade.
Since there is a required balance to earn interest, then the initial deposit is P100,000 and a monthly savings of P7,275.60. Check the forecast contained in the table below.
Equicom ATM Savings Account
The Equicom ATM Savings Account offers an interest rate of 0.50% per year. It features a really low initial deposit of P2,000 as well as P5,000 required balance to earn interest. The account comes with an ATM/debit card, which you can use to withdraw any Equicom, BancNet, Expressnet, Megalink, and VisaPlus ATMs, which may be subject to fees.
Initial deposit: P2,000
Balance to earn interest: P5,000
There is a maximum withdrawal of P25,000 per transaction and P50,000 limit per day. However, you may conveniently manage your account through their online banking facilities.
Because there is no large initial balance required like other accounts we’ve seen so far, you definitely can slowly build your savings with a small deposit. For example, you can save P8,163.78 each month for 10 years to have one million pesos through Equicom ATM savings account. Please see table below for projection.
How to open a savings account
How do you open a savings account? Well, there are a few steps that you can follow.
Research. So now you may want to get started and open a bank account for yourself. The first thing you’re going to do is read up about it. You’ve already done that by reading this article, and you definitely can do more reading in other sources such as PDIC and Bangko Sentral ng Pilipinas.
Decide on a bank. Make a decision which bank you’d like to make your deposits. Ideally, it should be an institution with long history of stability.
Decide on a product. Once you made up your mind on a bank, check the deposit that best suit your needs. Do you need an ATM card? Would you be using cashless payment or a card that is accepted in online shops? Is passbook more convenient for you?
Prepare the documents. You can research about the papers needed to get ready. Check the bank’s website or you may pay them a visit. They would give you a list of things you need to have such as required initial deposit, identification cards, proof of billing, and other files.
Open the account. Drop by the bank of your choice and open the account. It generally takes just one visit to complete the application. See if you can also open an online account if you need one.
Wait for issuance of ATM card or passbook. Some banks would issue an ATM card or passbook immediately. Others would ask you to drop by again after a specified period of time.
Enjoy. Use the services. You can now use the ATM card at machines near you or the passbook at the branch convenient for you.
What to look for in a bank
What characteristics of a bank should you look for? In opening an account, it is important to choose the institution that you can trust. Here are some of the qualities that an ideal bank must possess.
- History. Of course we want to give chance to banks that are just starting up. However, those with a long history have an advantage for established their credibility.
- Financial products. Check the financial products that they offer. Not all products like ATM, passbook or checking accounts are made the same, so getting to know about what they have is crucial.
- Location. Choose a bank that has a branch near you. You never know when you’re going to need their services or make transactions, so a bank that is conveniently located is ideal.
- Services. You may want to find out if they have online access, the number and locations of of ATMs, and other services that you may need.
- Customer care. It’s great to choose an establishment where they care about their clients and look after their welfare.
- Perks and benefits. Do you want to transact online? Would you want to use an ATM card that rack up points every time you make a purchase? How much interest are they giving to their depositors? Check the perks that come with the account that you chose.