I have always thought that savings accounts give higher interest rates to current accounts. A check with my Maybank Kawanku savings account, HSBC basic savings account and JustOne current account revealed a couple of surprises.

Firstly, effective 14th May 2009, Maybank Kawanku has stopped paying interest for deposits below RM10,000. And the highest interest rates start from 0.15% up to 1.00%. See table below.

Secondly, my current account pays higher interest compared to both my savings accounts!

Maybank Kawanku interest rates

My HSBC basic savings account pays a flat interest rate of 0.25% for all amounts.

HSBC basic savings interest rate

My SCB JustOne current account interest rate starts from 0.88% !! And not only that, my deposits also earn Choice Points which can be used to exchange for gifts.

SCB current account interest rates

My current account also earn Choice Points

From now on, I’m going to use my current account as my savings account.

The Budget 2010 that was unveiled last Friday impacts me more than previous years Budgets. Here’s a summary of proposals that will impact me

The Good:

1. Increase personal tax relief from RM8,000 to RM9,000.
2. Increase EPF relief from RM6,000 to RM7,000.
3. Broadband relief of RM500.

I am in the 19% tax bracket. These additional reliefs will save me RM475 in taxes.

The Bad:

1. Service fee imposed on credit cards and charge cards. RM50 for principal cards and RM25 for supplementary cards.

I have 6 principal credit cards. I’m going to keep only 2 cards and terminate the rest. This means I still have to pay RM100 service fee.

Potentially Good:

1. The reintroduction of RPGT 5% beginning Jan 1st, 2010 irrespective of holding period. This will create an urgency for the sellers to sell their properties by end of this year. And since I am in the market looking for a property, I might come across a bargain.

Potentially Bad:

1. The Government proposed to use MyKad for petrol transactions to ensure that only the poor gets to buy subsidised petrol. Nobody knows yet how this will be implemented. I may have to buy unsubsidised petrol next year.

I had totally forgotten about a payment due on my credit card. I only found out about the late charge of RM5 when I logon to my account to check my statement.

I promptly made my payment by cash the next day, and called the customer service to have my late charge waived. I was glad to see the late charge waived two days later.

What I was worried most wasn’t the RM5 late fee, but the thought of having this late payment being recorded in my CCRIS report. The CCRIS stands for Central Credit Reference Information System is a database system containing credit information of borrowers in Malaysia.

When people apply for loans, the lenders will check the applicant’s credit history by referring to CCRIS. And a black mark in the applicant’s credit history could result in the loan application being rejected. Because I am planning to buy a property and apply for mortgage, I was very worried that this late payment will be recorded in my credit history.

I was given the “Debt Collection” department phone number of my credit card issuer to check if this will be recorded in my CCRIS. Fortunately, and I was surprised to learn, that late payments will only appear in a person’s CCRIS report if they are at least one month old. So, I was given the assurance that my late payment of a few days will not appear in my credit history. Thank God!

I was glad to see the late charge being reversed two days later.

I feel sorry for these people who resorted to colluding with merchants to take out money from their credit cards. These are people who could not control their spending. And colluding with these merchants to take out more money from their credit cards means digging bigger holes.Surely there must be a better way to reduce the interest payments without resorting to colluding with these unethical merchants.

First of all, why not choose to utilise the “zero balance transfer” promotion? The cardholder can transfer the outstanding balance of a credit card to another card and pay zero interest for a certain amount of time. I know not every card issuer have this promotion. And usually this promotion is offered as an incentive for new cardholders to sign up.

Next, can try to talk to AKPK. Perhaps they can help work out a repayment plan to pay off the credit card debt. Maybe they could even talk to the card issuer to have some of the charges and interest reduced.

Something strikes me as odd. These people can pay upfront 18% cash to the merchant. Seems to me these people are not cash strap. It seems to me that these people wanted to withdraw cash from their credit cards.

If taking a cash advance from their cards through the bank, they will be charged a 5% cash advance fee plus will start charging 18% interest on the amount outstanding immediately.

Instead, these people are willing to pay the 18% interest upfront to the merchant. And on top of that, another about 4% interest on the installment on the credit card. This clearly is a worse deal than taking out a cash advance directly from the card issuer. Because with the card issuer, the actual amount of dollar interest you pay will reduce as the months go by if you pay your installments monthly. The total amount of interests paid could be less than 18%.

Without analyzing the situation, options and financial impact properly, these people have dug a deeper hole. These merchants have no interest in helping the cardholders lower their interest expense. They are only interested in fattening their wallets.

Savings account should be free, and I’ll tell you how to get one at the end of this post. We are already getting very low savings interest rates. I feel that it is unfair to impose fees on savings account.

When we save our money with the bank, we are actually lending our money to the bank. The bank takes our money and lends it out as housing loans, overdrafts, etc. and makes alot of money via interest.

Imagine the bank earns 3% in mortgage interest, and then pays the savers 0.2% as savings interest. The bank makes 15 times more than the savers. Yes, the banks need to make more to cover its overheads. However, my point is the bank is using our money as working capital to earn even more money and so it is unfair to impose miscellaneous fees on savings accounts.

Today, I have closed my CIMB savings account. Thereby saving me RM8 ATM card fee a year. I have my Maybank savings account for many years now and I have never had to pay any fees on my savings account.

Can you imagine, if the amount of money in your savings account is small, and the interest you earn is little, then the annual RM8 ATM fee will wipe out all the savings interest you have earned in the whole year. And maybe your savings interest is not even enough to cover the ATM fee.

Many banks, when you ask to apply for a savings account, the customer service will recommend that you open XYZ savings account. However, these savings accounts come with all types of fees such as the popular annual ATM fee, and maybe penalties if your account is lower than the minimum balance. What you need to do is ask for “zero fee savings account”.

Here’s my personal experience. I went to HSBC to open a savings account. The customer service introduced a couple of savings accounts to me. But these come with fees. I told the customer service that I don’t want any fees. The customer service explained that all savings account now comes with at least the RM8 ATM annual fees. I insisted that I’d only open a savings account if there’s no fees. The customer service checked and rechecked her computer and finally showed me a savings account without any fees.

Remember, “the customer is always right” and the banks do have no fees savings accounts. It’s just that they don’t recommend these savings accounts outright because these accounts don’t make money for the banks.