The deposit season has returned with competitive offerings by banks. It is a good time to save in preparation for an upward trend of inflation amid global economic uncertainties.
The surprise move by the Monetary Policy Committee (MPC) last Wednesday to cut the benchmark interest rate by 25 basis points to 2.75% has made some of the existing deposit programmes even more attractive.
As most banks have yet to follow the MPC's lead, our survey found some of their deposit products very attractive at a time when real interest rates remain negative.
Two state-owned banks _ the Bank for Agriculture and Agricultural Cooperatives (BAAC) and Krung Thai Bank (KTB) _ are attracting retirees with special interest rates.
The BAAC offers its third retirement fixed-deposit scheme with two maturity options _ three and four years _ with stepped interest rates. For three-year deposits, it offers returns of up to 4% per year or 3.5% on average, while the interest rate for four-year maturity is as much as 4.6% per year or 3.7% on average.
The product requires a minimum deposit of 100,000 baht, and depositors need not pay withholding tax.
At KTB, its deposit account for retirees is fixed for 60 months. It provides interest of 4% per year with monthly interest payments. The bank has set a minimum deposit amount at 500,000 baht.
Bangkok Bank (BBL), the country's largest, has prolonged its offering of two existing fixed-deposit accounts _ four months and 11 months _ until next Monday. Interest is 3% and 3.3% a year, respectively.
Both accounts require a deposit of at least 200,000 baht, and BBL will pay interest upon maturity.
Siam Commercial Bank (SCB) has introduced a 12-month account, Flexible Fixed Deposit, to tap self-employed customers with a minimum deposit of 500,000 baht. With unique product features, it allows customers to make unlimited withdrawals without fees, but they are required to put the same amount back into the account within 60 days. They will receive 3% interest.
Rungruang Sukkirdkijpiboon, a first executive vice-president of SCB and head of its customer segment division, said this deposit is designed in line with customers' requirements to enhance their business opportunities while still receiving handsome savings returns.
"Banks are paying more attention to market segmentation, while competition in the deposit market has been changing from the general market to specific areas. Product features and innovations are key challenges to attract customers, while pricing is just a marketing gimmick," he said.
Mr Rungruang said Flexible Fixed Deposit was launched during a time of economic uncertainty. The product affords greater flexibility to customers in handling both risks and opportunities in money management. It also provides chances for increasing wealth. For example, a customer can deposit money in this account and then allocate some money to invest in stocks for a few weeks.
"It's a good choice if the customer can possibly get a return on stock investment of 10-20% in a given period before moving the money back into the deposit account," said Mr Rungruang.
SCB recommends customers allocate money to the account at 20%, 30% or 40% of total deposits, depending on investment opportunities. Staff are ready to provide advice.
TMB Bank also has a new product, the TMB Free Flow Daily Account, focusing on customers wishing to make several transactions each month. Clients can make up to 10 transactions a month free of change without withdrawal limits on transfers or payments. However, depositors need to have a one-time credit of 15,000 baht passing through the account per month.
Kanchana Rojvatunyu, TMB's head of retail marketing, said the new account offers zero interest in order to provide customers with convenience in making financial transactions without charge.
A TMB survey found many depositors receive a return on deposits of only 50-100 baht per year, but transaction fees can be 1,800 baht per month.
"Our deposit product has an advantage in transaction services and is not suitable for clients who want deposit returns," said Ms Kanchana.
Bank of Ayudhya has a feature savings account, Jad Hai Savings. Customers receive several benefits, particularly free-of-charge transactions, when opening the account and applying for its debit card. They do not pay fees for five bill payments per month, money withdrawals or inquiries at any ATM of any bank. They also receive an interest rate of 0.25%.
CIMB Bank Thai is offering an attractive rate for two new savings products. The Speed Savings account gives an interest rate of up to 3.1% per year and allows clients to invest in another financial product such as a mutual fund, bancassurance or a bill of exchange. It does not set a maximum deposit amount or limit withdrawals per month.
Another savings account, Don Jai, offers a fixed rate of 2.9% for accounts opened before Jan 31 next year.
The state-owned Government Saving Bank (GSB) provides 2.75% interest for a special savings account fixed for 99 days with a minimum deposit of 10,000 baht.
The GSB also has a savings account fixed for 399 days in which customers receive an attractive 3.3% interest rate with a minimum deposit of 10,000 baht.
Customers looking for a short-term fixed deposit with a high interest rate should consider some of the packages at Thanachart Bank.
Speed Growth, a six-month account, provides interest of up to 4%. Under the stepped interest rate, customers receive a rate of 3% for the first four months and 4% for the fifth and sixth months. The rate averages 3.33% per year, and the account requires a minimum deposit of 100,000 baht.
At Kasikornbank, depositors can enjoy an attractive rate of 4.25% per year, with interest payments made every three months. The account requires a minimum deposit of 9,000 baht and a maximum of 1 million. Other financial services are available for account holders such as insurance or an SME alert service.
While these deposit packages have attractive rates and other incentives, customers have to consider details and conditions carefully. Depositors may need to follow conditions in order to receive satisfactory returns or special privileges from such products.
A boy watches a sign showing attractive rates for deposits in front of a bank branch in a Bangkok shopping mall last Friday. PATIPAT JANTHONG
About the author
- Writer: Somruedi Banchongduang
Position: Business Reporter