When I discussed Emergency Funds the last time, I mentioned that it’s best to put them in high-yield savings accounts to lessen the impact of inflation.
Why opt for a High-yield savings account and not a commercial bank?
Most commercial banks in the Philippines (and even in other countries) offer very low-interest rates on your deposits. How low you might ask? A freaking below 0.1% per annum. At the time of this post, the lowest is at 0.0625% per annum. This means that if you have 10K in the bank, you will earn 6.25 pesos in a year.
In addition, if you factor in the 20% government-imposed tax, you will then have net interest earnings of 5 pesos. Nice, isn’t it? *insert sarcasm*
Also, most banks will require you to have a certain minimum balance before your money will earn interest even. And if you go below the maintaining balance, you’ll get a deduction of an average of 200 pesos. What the hell, right?
Oh, and don’t forget about inflation which on average over the past decade (2012 – 2021) is at 2.8%.
With the measly gains (or actually losses) plus the hassle of securing documents and the time spent queueing up with these banks (to open an account and make your regular deposits), it’s no wonder why a big percentage of Filipinos don’t own a bank account.
So it is important to put your emergency funds into high-yield savings banks to preserve and even grow your money.
What are high-yield savings accounts?
By the name itself, these are accounts that offer higher interest rates than what commercial banks provide. Mostly, digital banks or rural banks are the ones that offer high-yield savings accounts.
Examples of digital banks/rural banks where you can get higher interest rates are the following:
*Click on the respective links for each digital/rural bank if you want to get more info.
Seabank
Seabank provides a 5% interest per annum wherein you get credited the fraction of your interest p.a. on a daily basis which happens between 12MN – 12:10 AM.
Here’s a peek at what you can see on your account:
Gotta love those daily interests!
Clarification on the Daily Interest Rates
As mentioned earlier, the interest is 5% per annum but a fraction of the interest is credited to your account on a daily basis.
For example, you deposited 10K in Seabank. The 5% expected interest you will gain in a year is 500. You need to divide that amount by 365 days which is equivalent to roughly 1.37 pesos. Due to a government-imposed 20% tax, it will be trimmed down to 1.096 which is the net interest that will be reflected on your Seabank account.
Due to the compounding effect, the net interest rate that you get will increase since they’re being added to your main balance.
CIMB
The base interest rate for their GSave (which is partnered with GCash) account is 2.6% per annum. They also have an UpSave account that has a base interest rate of 2.5% per annum as well but I’ll focus mainly on their GSave account.
They usually have a monthly promo wherein if you grow your average daily balance on your account by a certain amount (usually just 500), instead of getting 2.6% p.a., the basis for your interest for that month will go up to 4% per annum. Then, if you use your CIMB account for certain transactions, you will get an additional 2% p.a. for that particular month.
But wait, there’s more. If you pay your personal loan installment (that is if you avail of their Revi credit) with your GSave or Upsave accounts, you will again get another 2% p.a.
Oh, here’s another bonus. You are also covered with Free Life Insurance, provided you have a minimum balance of 5K on your GSave account. The Life Insurance coverage is equivalent to your daily average GSave account balance for the previous month.
The base interest p.a. is credited every 1st of the month while the bonus interest rates are given on a different date. They’re usually labeled “from ICMS” if you check your transaction history.
Maya
Maya has a 4.5% base interest rate p.a. And like CIMB’s GSave, they also have a promo to increase your interest rate to 6%. To get that additional 1.5% interest p.a., you need to use the Maya app for transactions (pay bills, buy load, etc). This will boost your base interest for the next 30 days.
Note: Maya has made some changes to their base interest and boost promo. To know more about the changes, check this article: Maya Savings Account Interest Rates Updated: What You Need to Know
Similar to Seabank, you’ll get your interest on a daily basis. Your account history will show that the base interest rate is credited at 12 AM but it’s usually reflected around 3 AM. The additional bonus interest is given later in the day.
Here’s another interesting tidbit about Maya. The Maya app is similar to that of GCash wherein you can also use it to pay bills, buy load, and purchase products. They also have crypto trading which GCash is soon to offer. And on top of that, they have these “Missions” wherein if you accomplish them you get vouchers or cashback.
Other high-yield savings accounts
There are other high-yield savings banks like Tonik, GoTyme, and other rural banks.