(This feature serves as a mini update to my post on Time Deposit Interest Rate, the previous post can be found by clicking this link)
I had had strong…’prejudice’ regarding interest rates. I used to assume that interest rates from small banks is usually higher than those of larger banks, that larger banks are laggards when it comes to competing on interest rates.
Yet when I went to the website of two largest bank in Indonesia in Friday last week (July 3rd 2009), i found a surprise.
The interest rates of these 2 banks is actually as competitive or even more competitive than the bank i’m using now for my time deposit (the account statement indicates that my interest rate is 6.75%)
I was perplexed…how can this be? i thought i was having a good deal with the smaller bank…
I thought i was trading a slight amount of security with a larger amount of interest rate.
Turns out that i was wrong…i had been placing my money on the wrong basket.
Wanna see what i found out?
Disclosure: before i continue, i must declare that at the moment of writing, i work in Bank B. This article is not commissioned or sponsored by my current employer, indeed, i used so many expletives in this blog i hope that my employer never know that this blog exist.
Disclaimer: This article is created to state an opinion by the writer. The article is not meant, and should not be inferred to meant, as to promote or defame certain entity. Any brands or registered trademark mentioned in this article are the property of their respective owner. The rate mentioned in this article are true to best of my knowledge as was posted at each bank’s website as of Thursday, 9 July 2009 at 16.54. I am not responsible if the rates are proven wrong due to wrong information posted on the website, or the wrong set of data being reffed by the website, or any other miscommunication.
Time Deposit Interest Rate
Let’s compared the Time Deposit interest rate from Bank B and Bank M, and as i have mentioned, my current (smaller) bank provide me with 6.75%.
Let’s look at Bank M first (below)
Bank M’s minimum is Rp. 10 million, in which you get a meager 6.25% at 1 and 3 month (not great right). At this point i’m still happy with my current bank.
Then, i saw Bank B’s time deposit interest rate (below)
Now, look at the 3 month’s interest rate for deposit below Rp 1 billion. It’s 7.25%, a huge jump from the 6.00% rate for the 1 month deposit. Even more, Bank B’s minimum placement is at Rp. 8 million.
At that point i was devastated…i’ve been putting my money at the wrong bank…
I should have shop more carefully.
(my friend informed that Bank M is actually more willing to negotiate, provided you can show the money, but in this blog, i only deal with quotable rate, not negotiated rate)
Then i thought..”wait, if Bank B’s time deposit rate is better, would their savings account interest rate also better?’
Savings Account Interest Rate
So i look at both banks savings account interest rate. I assumption that savings account interest rate would be dismal, and based on this assumption, i then assume that the largest bank would have very very similar rate and terms for their savings account. Thus, no differentiation exist between Bank M and Bank B
First, Bank M’s (below)
Now, let’s look at Bank B’s savings account (below)
What does this tell you?
1. you lost money when your money is below Rp. 1 million, never let your money stand below Rp. 1 million when you save with the largest banks
2. Bank B provides better rate when your money is between Rp. 1 million and Rp. 5 million
3. Bank M provides better rate for funds between Rp. 5 million and Rp. 10 million
4. Bank B then delivers a better rate for Rp. 10 million and Rp 50 million
5. This tag game continues all the way to Rp. 1 billion, with Bank B leading the edge
If you have a savings account, Bank B provides a generally better rate, unless you put your money in the nether region of Rp. 5 million to Rp. 10 million.
Hope this post help you in finding the best deals.