“You must ALWAYS ensure you have more than one bank account in Singapore!”
This is my principle and also advice to every Malaysian who comes to Singapore for work.
I had my rationale back then, and the longer I’ve stayed here, the more reasons to have more than 1 bank account have surfaced.
I think the frequency of DBS‘ banking app and/or PayLah! grabbing the headlines for going down is happening far too often.
I for one, am mainly a UOB user, so I have been spared by DBS’ app malaise most of the time.
But I have been also saved by DBS’ Paylah a few times when some hawkers’ PayNow QR codes are faulty or they accept ONLY PayLah.
So here are some obvious and not-so-obvious reasons why its essential to have at least more than one bank and PayNow account.
Diversification from app outages
Not all banking apps are perfect; it’s just that DBS’ app crashes too often.
But from what I observe, more than half of those in Singapore heavily rely on DBS for their banking needs. I don’t have a strong opinion on which bank is the best, but I for one, am someone who does not carry a lot of cash.
I am always in camp cashless payment, and I thank the Shopback app for allowing credit card payments at hawkers or small stalls.
My default payment is always Google Pay, followed by Shopback, and then QR payments either through PayNow or PayLah.
If all of the above fails, then I resort to cash. So as you can see, for me to be cursed by needing to pay with cash even when i’m out the whole day, it must be something severe – either internet service or electricity is down in the whole of Singapore.
Cashless payment save the hassle of digging for notes and coins. But being at the mercy of one app that crashes can also be frustrating. That’s why installing a few other apps or having an alternative account is just pure common sense to mitigate this.
Interest rate farming
I know interest rates for various savings accounts have started to adjust downwards.
But if you have a huge war chest or savings and want to earn more interest rates, it still is sensible to manage more than 1 account.
I am not someone who deep dives a lot into maximising interest rates from each bank, but I believe most, if not all, have a capped and tiered structure for effective interest rates to be earned.
Thus, it doesn’t make much sense to be putting your money into only one bank account if you have already maximised the interest rates. You can still concentrate your savings and rely on 1 bank account. But just be prepared to lose some of the benefits when there are app outages, or keep cash on hand for payments.
I believe Singapore will be slowly transitioning to a cashless society in the next 10 years. I bet you have already encountered plenty of outlets and shops that only accept cashless payments.
Jars concept for wealth management
For those who find it hard to do proper budgeting and financial planning, I think adopting the jars concept is definitely a great way to manage your monthly spending.
While in the past, people did use real jars, today due to digitalization, you can set up multiple savings accounts as your digital jars. Each account, or card, will have a capped limit based on the budget you set out.
Having different accounts will paint a clear line and limit, and ensure you adhere to the budget set out strictly. Imagine if all your savings is in one account with no tracking; it would be challenging to stick to the budget.
Keeping your accounts active if you migrate or go back to Malaysia – common sense!
Back then when I first came to Singapore, I always had the end in mind, that there is a possibility I might eventually return to Malaysia for good.
Fast forward 7 years, and although I am still here, if circumstances ever force me to leave for good or to other places around the world, I am sure I wouldn’t be caught with a dormant Singapore bank account 12 months down the road.
Back then, with no banking apps, and with banking all via physical presence at a branch, it is possible to neglect a bank account and eventually end up with a dormant account.
These days, just a simple app launch, and transferring even $1 from one account to another, will ensure that your account stays active.
Most would concur with me, that maintaining an active SGD-denominated Singapore account, is better than closing it should you migrate out of SG or return to Malaysia for good.
Having two accounts under your name, and performing a debit and credit transaction between the both of them, was just pure common sense to me back then.
And it’s still one of the golden pieces of advice I preach and practice today.
Diversification is the only free lunch
Not only does this principle apply to investing, but it also resonates strongly in banking accounts.
If you still need more reasoning, consider this as my closing punchline if the above does not strike a chord.
All of our deposits with our banks are protected by the Deposit Insurance Scheme, which insures up to S$100,000 per account in the event a member bank or finance company fails.
If you’ve noticed your well-to-do relatives dishing out angpaos during CNY, you might have observed that they could be Premier Banking clients with a handful of banks, which gives you a hint at how the wealthy also maintain multiple accounts.
For the affluent, I am sorry if I have revealed to the public that the red packets you use can give out a subtle message about your wealth status.
But for the general public, I hope that you take a leaf out from them, and not be at the mercy of one banking app when the next calamity strikes!
Haha!
