Comparing Time Deposit Rates of Philippine Banks: Lessons Learned

24 comments

Updated: March 28, 2017

This article is part of a series, read the previous post here: Comparing Time Deposit Rates of Philippine Banks Part 3

Last week, I went to several banks and asked their time deposit rates for P300,000 placed for 180 days.

My goal was not just to know their current rates, but to also see how well they accommodate investment inquiries; and likewise, to get a glimpse of their own personal finance.

The results are, in general, disappointing.

Most of the bank officers don’t have enough knowledge about their unit investment trust funds. I expected that at the very least, they know their UITF product list and could tell me which ones are conservative, moderate and aggressive investments – but most of them can’t.

Moreover, out of the six, only two have investing experience, which I find surprising given that they work in a place which gives them easy and convenient access to investment information.

Don’t banks encourage their employees to become investors in their own products?

In any case, I believe that bank officers, specially the front desk accounts and sales staff, should have adequate product knowledge and a good financial mindset – because they are the ones whom many ask for basic financial advise.

This is just me, but I think all banks should have the corporate social responsibility to give people sound financial advise when it comes to money management – and this can start by ensuring their bank personnel are knowledgeable on good personal finance habits.

So what can we learn from all these? There are many, but I believe this is the most important…

Which is, if we want to increase our financial literacy, then we should have the initiative to learn by ourselves – this means that we need to be proactive in our quest for financial knowledge.

Bank officers, financial advisers, money gurus and wealth managers are all around, trying to tell us what’s best for our money. Don’t just accept what they say and blindly follow their lead.

Listen to them, but be sure that your financial decisions are always based on balanced information that you’ve acquired from various sources.

For what it’s worth, I believe that a well-rounded understanding of investments and personal finance is a must if we seek financial freedom in our life.

From my research, China Bank currently has the highest time deposit rate at 3.000% pa. But don’t take my word for it, do your own “shopping”. Also, take note that you can usually get higher time deposit rates if you personally visit a branch and inquire.

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24 comments

  2. How much will my P1,000,000 will earn if I will put it in a bank’s time deposit account for one (1) year.
    Thanks a lot,
    George

  3. Hi Fitz,

    Thanks for all the informations, this will be a big help for everyone like me as an OFW. I always read your articles, and all I can say is, this will be a good guidelines for everyone of us not only for OFW’s to have a financial freedom in the future. Keep up the good work!

  4. This really helped me a lot. I’m young and in need of advice to where to put my lifetime savings. I tried asking in BDO and I could obviously see the bank officer is not really sure in what she’s talking about, she just gave me a brochure and answers almost all of my questions with: “Kayo po bahala kung gusto nyo magrisk.” I was discouraged to ask again.

  5. Hi fitz,

    I followed and read all the articles about time deposit account vs. non deposit products. Its normal for the frontliners of the bank not so familiar with the non deposit products (thats what we call to other investmenst products, since it is not insured by PDIC.).Bank’s fronliners or CSA’s (Customer service assistant)priority is to sell bank’s products ( savings/current/time and special savings accounts). They are basically trained to familiarize these products.Other products such as UITFs and longterm investments are handled by the bank’s Trust & Treasury depts. The CSA may introduce or cross sell to clients other non deposit products, but they still have to refer the clients to trust or treasury for better explanation on how these investments works.. FYI..not all bankers can sell UITF products, only those that are licensed and had attended some seminars. That’s what i remember when i left trust dept.in my previous bank.

    thanks..
    Fe

  6. Hi Fe,

    Thank you for the input. It’s good to have someone who worked in the Trust Department to enlighten us about those facts.

    I actually don’t mind being referred to the Trust Department for further information. In fact, that would be good because I know they’re the ones whom I can extensively ask about the product.

    However, I hope all CSA’s are able to properly introduce those products to clients. At the very least, they should be able to provide a brochure and help clients get connected to someone who are trained and licensed to talk and sell non-deposit products.

  7. I commend your effort by going from one bank to another just to get the information you needed for your investment. I, too, am disappointed when I tried to inquire which amongst their products is best to invest in given my own situation. It’s either they refer me to their website or give me brochures for me to read on (to think that I’d waited for my turn to be entertained only to end up giving me these answers).

    The front desk staff needs a lot of product training (at least the basic information or comparison of each investment products) for them to encourage potential investors to avail of their products/services. BTW, we can get much information on their website, though some are not updated.

  8. Would be depositors need to be aware that high interest rates on deposits could signal a weak bank. Both LBC Bank and Banco Filipino offered relatively high interest rates on their deposit instruments to lure depositors in what the BSP itself characterized as a “Ponzi Scheme”, meaning depositors were funding the bank’s losses. Of the banks in the banking system, thrift banks are generally weaker than commercial banks. For a list of weak thrift banks, check out: http://bancofilipinofailure.blogspot.com/2012/02/thrift-banks-improve-due-to.html

  9. Hi Fitz,

    In this bank that I went to the other day, I was assisted by no less than the business manager. I didn’t know if that was their SOP when it comes to inquiries with UITFs though.

    Anyway, he was very entertaining. He provided me with a printout of their products along with the corresponding performance per calendar year since the product’s inception. I already had a product in mind though so I pressed on in my desire of wanting to invest in their equity fund. He told me that he was invested himself and that really, with these funds, there is NO RIGHT time to do it. He told me that anytime is the right time. Also, he informed me that since the stock market is doing good at this time, the equity fund will surely do good. He also showed me their balanced fund and encouraged me to also invest in that if I was able to pool some resources again. Generally, I was happy with the service.

  10. Hi dada. Thanks for sharing your story. I’m glad that you were able to find a bank officer that was able to really help you. 😀

  11. @ Christoph

    It’s really nice to know that OFWs nowadays are becoming more involved in investing rather than spending their hard-earned money. Actually I can relate with you coz I am a fellow OFW too. Good luck to you too bro.

    @ dada
    I’ve got a feeling that we both have the same bank. 🙂 Anyhow, I just want to share with you my take regarding equity UITF investment. He is correct when he said that there is NO RIGHT time in investing in this type of fund.

    I tried to time the market before when I planned to invest in UITF. But the low NAVPu never came. It continued to rise until such time when I decided to invest na. And after I made my investment, the rate went down! But since my plan is for a long-term investment horizon, I did not withdraw.

    Right now, my money is still there and it continue to rise. Moral of the story? Stick to your investment plan, because equity fund is really designed for longer holding periods.

    BTW, hope you can also visit my blog where I write about my good and bad investment experiences and my quest towards financial freedom.

    Goodluck to us all.

    Just my two cents.

    Desertman

  12. I’m glad to came across your site. Saw your blog from our Foreclosure Philippines blog and learned that you’ve won in the Philippine Blog awards.

    Just want to share also that I did something similar to what you did last time, scouting banks and learning what they can offer. And you’re right, most of them don’t know what they should know!
    http://www.roszain.com/2008/09/sda-time-deposit.html

  13. I agree with what’s posted here. I even have relatives who worked in investment companies and banks as well, but for years, I never knew or heard from them that they had invested in UITFs, stocks or whatever products that they have. Mas sa kin pa nagtatanong nga yung iba kadalasan which is weird, because I work in the IT industry.

  15. hi Fitz!

    This is one of your best post ever. I truly congratulate you for this bright idea and how you showed us an important lesson. coz most of the time we have limited information on investing in the local context as most information are from the US or other foreign countries. Just shows how much our kababayans need to know about financial literacy and how much help we need to grow financially mature. It may be the bank’s policy to refer their customers to other department but personally we should be responsible for our own financial education. kudos to you, and continue your quest to educate the Filipinos! 😀

  16. If you want higher returns on time deposits, go to rural banks as they are offering 5-6% p.a. If you’re afraid that it might become bankrupt, just look for banks which are members of PDIC and deposit not more that P500K.

    Most bank personnel are not financially literate. That’s how I perceive it having conversations with those working at the banks. Even some bank managers have limited knowledge on investments and have never made theirs too.

    Mutual funds are good but not today because it’s at its peak but that doesn’t mean it’s not good to invest in. Good for me, I have bought my fund in June 2009 and regularly added until september 2011 when the fund is already high. Today’s return? it averaged 71.5% from 2009 for the equity fund.

  17. Hi Sir Fitz,

    Thanks for this blog entry! I am currently looking for the perfect bank where I can start my investment opportunities (since I am also just starting with my job, about to turn 1 year next month). Indeed, your financial endeavors is a big help for us that needs to be financially smart this early period of time of our employment years. Keep it up, Sir!

    Best Regards,
    Arwin V.

    P.S.
    A proud Villafuerte here, as well. 🙂

  19. This is really true. The bank personnel doesn’t really know much about their products and services. They even got annoyed when I asked questions… Kung pwede lang sumbong ko sila sa manager. he!he!he!…. Kaya nga po nagtanong kasi di ko alam at gusto ko rin makasigurado.

  20. Hi sir, is it valid to say that it is wise to engage in the TD scheme on a monthly basis? For example, bank A offered .875% interest monthly and 1.5% if the term is 12 months. So if i will do it on monthly basis, that will sum up for 10.5% annualy? Or .875 x 12 = 10.5? thnx

  21. Hi harold. That’s probably 0.875% per year, but compounded monthly, so in effect, (0.875/12)% ang magiging rate mo per month, which will earn around 2% gross in a year because of compounding.

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