Tuesday, 19 November 2013

"Robbed" by bank

Recently I placed a sum of extra cash in OCBC bank fixed deposit at interest rate 1.08% p.a.

Today by chance I saw my parent's FD renewal notice from the same bank.  I was astonished to see that the renewed interest rate for another 12 months tenure is just 0.25%.

I called the bank and was told that the 1.08% p.a. interest rate is for fresh fund only.  All existing FDs who are on the auto-renewal option are renewed at 0.25% p.a. 

It is reasonable that the bank offers higher promotional interest rates to attract new funds.  However, it is totally unacceptable that existing FDs are renewed at the pathetic interest rate of 0.25% p.a.

Giving customers the convenient option of auto-renewal, but then renewing their FDs at 0.25% p.a. is practically daylight "robbery".   A lot of senior customers, who may not know English or can't read the small 0.25% interest rate, are not aware of how their FDs are faring.  I wonder how much the bank saves by paying less/fair interest rates to their loyal customers.  My parent's FD has been with the same bank for 25 years and I wonder how much they have been "robbed".

The bank officer said this is bank policy but offered one solution.  My parent could close the existing FD, hold the money for at least one day, then open another FD the next day.  Now the money becomes fresh fund and they can enjoy the interest rate of 1.08%.

I think this small inconvenience is worth it to convert 0.25% p.a. to 1.08% p.a. 

My emergency fund in my FDs are usually transfer out to banks with the current highest interest rates in the market after matured and seldom stay in the same bank for more than two years. 

Readers who know how other banks' policy on FD auto-renewal, please share.  


  1. Ocbc sucks! They insisted me to pay 12 dollar debit card annual fee. And have to pay in person in branch!

    1. Yes, ocbc is no good. Unfortunately, I have a few giro through them. So still need to maintain the a/c. BTW, I think POSB debit card is free.


    2. For ocbc "plus! visa debit card", l have recently got the bank to waive the $12 annual fee for me. You can get debit cards with no annual fee from ocbc --->"ocbc Yes! card" and "Frank debit card".

      For posb "multi-tude card", l recently got the bank to waive the $24 annual fee for me. You can get debit cards with no annual fee from posb --->"posb Go! debit mastercard"

  2. For Special Promotion on fixed deposits, it is very normal for banks (ocbc, uob, cimb, etc etc) to revert back to base interest rate during auto-renewal; and this must be made known to all its customers (particularly seniors!).