These promotions, which are seeing rates being revised every month, come as global central banks go on a rate-hike race to combat soaring inflation.
“As the concern on inflation is pressing, the speed of increase (in interest rates) has been quick as well, hence you can observe how fast the banks are keeping up,” said Mr Tan Chin Yu, a senior client adviser at wealth advisory firm Providend.
While banks make swift adjustments to their borrowing rates, they also have to remain competitive in the space of deposits.
“Previously when interest rates globally were low, banks were lending out at low rates so they have no room to raise interest rates when it comes to fixed deposits … But now, they can raise rates to attract more depositors and bring in more funds,” Mr Tan added.
Foreign banks are usually more aggressive in the fight for deposits, as their smaller deposit bases mean they need to balance liquidity and cost of funding visibility in a rising rate environment. But in light of the competition, domestic banks also have to ramp up their game, experts said.
OCBC and UOB both said there is strong demand for their promotional rates.
OCBC said demand for its time deposits was 75 per cent higher on average in September and August, compared to the average placements in the preceding six months. Over at UOB, fixed deposit volume tripled in September versus the month before.
While its peers dangle juicy deals, DBS – Singapore’s largest lender – has thus far opted to raise its fixed deposit board rates.
It has made two rounds of revisions this year, with the latest being last month, a spokesperson said.
For example, balances between S$1,000 and S$9,999 now earn an interest of 1.4 per cent for a six-month period, up from 0.75 per cent about a month ago.
DBS also recently adjusted the tenors of new fixed deposit placements from eight months to up to 12 months, so as to “better cater to customer demand”.
The bank said its customers prefer to have fixed deposits pegged to board rates due to a “greater peace of mind” when these deposits reach maturity.
“This is because they can roll over or renew their funds at competitive rates. This is in contrast with the promotional fixed deposit rates, which often come with conditions that are imposed on depositors,” the spokesperson said.