Photo cred9it: Andre Taissin/Unsplash
By now it should be widely known that UOB is reducing the interest rates of its flagship UOB One Account from 1 May 2024. This announcement was made as early as 1 April to give its customers a one month’s heads-up. While the notice period was nice, a lot had changed on the macro-economic front during this period. Specifically, inflation continued to stay hot which caused Fed to postpone its decision to unwind its interest rate hike. With Fed’s delay, did UOB jump the gun by cutting UOB One Account interest rates too early?
UOB One Account Interest Rate From 1 May 2024
Of the 3 local banks, UOB One Account stood out for the relative ease to unlock 5% effective interest rate on $100,000 of deposits. This yields $5,000 per annum, enough to fund the travel expenses of a small family for a regional holiday. As such, my family prioritised UOB One Account as our main banking accounts to maximise the interest that can be earned. Unfortunately, this lasted less than 3 years as UOB decided to revise its interest rates as shown in Diagram 1.
Diagram 1: Effective interest rates of UOB One Account with effect from 1 May 2024
The effective interest rate will fall from 5% to 4%, although the amount of deposits that can earn this interest rate has increased from $100,000 to $150,000. The larger AUM is welcome, and when combined with the current UOB Big Savings Payout Promotion, helps to somewhat mitigate the fall in interest rates. For instance, $250 cash credit on $50,000 new funds for 4 months represents an effective yield of 1.5% p.a. which is slightly higher than the 1% that they reduced. Another positive
