Comparing Time Deposit Rates of Philippine Banks Part 1

22 comments

Updated: March 28, 2017

After lunch yesterday, I found myself with a couple of free hours so I decided to spend the time doing research for my next post here.

Going out of the restaurant where I just ate with a friend, I saw several banks that was just walking distance from each other.

And I thought to myself, why not go to each one and ask about their time deposit products?

Certainly, it would be interesting not only to know their current time deposit rates, but also see how well they handle walk-in investment inquiries.

First, I decided to ask their best rate offer for a P300,000 time-deposit for 180 days.

And then, after they give me an answer, I prepared two questions to ask as follow up to the bank personnel whom I’d encounter.

First, I’d say – “This P300,000 is just extra money and I don’t have any plans of using it for the next 1-2 years maybe. Do you think it’s better to place it in a UITF so I could earn more?”

Then second, I’d ask – “Do you personally have investments in any of these products?”

And here’s what happened…

Bank of the Philippine Islands (BPI)

Time deposit rate given to me: 2.125% pa

“Extra money ko kasi yung P300,000. Wala akong plano dito for 1-2 years. Mas maganda kaya kung sa UITF ko na lang siya ilagay?”

“Pwede rin po, sir. Siguro pwede sa inyo yung Short Term Fund namin. Kung interested po kayo, bibigyan namin kayo ng risk assessment ngayon para malaman natin kung pwede kayong mag-UITF.”

“Ah siguro next time na lang, nag-i-inquire pa lang naman ako. So ikaw, may Short Term fund ka rin?”

“Ay dati po sir, kaso tinanggal ko rin kasi nung nagpa-risk assessment ako, nakita sa profile ko na pwede akong mag-Balanced Fund.”

“Mas mataas ang potential earnings dun kaya nilipat ko,” she continues. “Yun po ang maganda pag nagpa-risk assessment kayo, malalaman natin ang risk profile nyo at makikita natin kung saan kayo pwede mag-invest.”

I liked how the bank staff was also an investor of their own product. This meant she’s probably knowledgeable about them if ever I decide to engage her with more specific questions about their UITF products.

Moreover, she was also quite enthusiastic into getting me to fill up their risk assessment form. That is a good sign because it means getting investment accounts are a priority for the bank as much as getting deposits and consumer loans.

I decided to end my inquiries there. I thanked her for the information and told her that I’ll consider it.

I went out and proceeded to the bank a few meters away.

East West Bank

Time deposit rate given to me: 2.500% pa

“Extra money ko kasi yung P300,000. Wala akong plano dito for 1-2 years. Mas maganda kaya kung sa UITF ko na lang siya ilagay?”

“Sir, hindi po sure ang earnings sa UITF. Mag time-deposit na lang po kayo para safe ang pera ninyo. Mataas na po yung 2.5%. Sa ibang banks po mababa, like sa BPI, 1.87% lang ang time deposit rate nila.”

The answer amused me because I didn’t expect the bank staff to quote another bank’s time deposit rate, let alone give me misleading information (see BPI’s rate above).

Although in fairness, I believe that the 1.87% rate she mentioned is BPI’s interest rate for shorter-period or smaller-amount time deposit placements. In any case, I still went with my second question.

“Ah okay. So ikaw, may time deposit ka dito sa bank ninyo?”

“Ay wala po sir. Medyo unpredictable po kasi ang mga gastos sa panahon ngayon kaya hindi po ako nagta-time deposit. Mahirap na nakatali ang pera.”

To hear this from a bank staff was quite disappointing. Her answer gave me an impression that her personal finances are not that good, which meant I wouldn’t be comfortable talking with her about investments.

Given that I don’t know her real life circumstances, being a front line bank personnel whom many people seek for money advice, she should at least have an optimistic perspective about personal finance.

For example, a more acceptable answer would have been: “Wala pa po sir. Sobrang nag-ta-try nga akong mag-budget ng gastos para maka-ipon ako ng pang-time deposit.”

Anyway, after asking that last question. I thanked her for the time and proceeded to the next bank just across the block…

—

This ends Part 1 of this article.

Author’s Note:
The conversations above are solely based on my personal experience with the specific bank branches. Duplicating the situation in any of the branches of the same bank, may result to a different experience.

The objective of this “experiment” is not to seek which bank is better, but to help you assess if a bank personnel (regardless where he or she works) is a good and capable resource person to talk with about your investment concerns.

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22 comments

  1. great article Fitz! can’t wait for part 2. am thinking about going to bdo to start a uitf investment, since it’s also my payroll account. hope you get to feature it too.

    thanks!

  3. Dear fitz,

    I usually do that whenever I purchase something, because I’m a purchaser, I usually ask the sales personnel if the budget is not the question, what brand will he/she recommend and why? Usually that gives me a better view of the product that I’m buying and they quite talk a lot if money is not an issue, they themselves will choose the brand for themselves and it apply to almost all . Recently, I just do that with the medical representative and the answer is far better than selling me the best plan that they think will earn them more.

    Keep it up Sir, your doing a very very GREAT JOB! I LEARN A LOT FROM YOUR SITE.

    Jeanette

  4. Hi Fitz. I recently joined your subscription list, but I have long been following your blog. There were so many new things I learned from you and I am actually into writing you to tackle this issue, but anyways it is already here so can’t wait for the part 2.

    I also tried this before to see which bank has the personnel who’s first knowledgeable on their products, second professionally accommodating, and third reasonably competitive. I even went extreme to not dress up casually, and so far it is only BPI/BPI Family who passed my set criteria above. I also tried this on the phone through their trust and investments, and China Bank and BPI tied on the first place. Can you include Allied Bank and at least a government-owned bank? I am just curious on how this would turn out, and see if we’ll have a “close” if not same assessment. Thanks and more power!

  7. 2.125% and 2.5% P.A.? Really?

    I’m not sure if you are the right person to ask here, Fitz, but do you have any idea how do banks come up with such figure?

    The reason why I’m asking is because I also have a time deposit account here in Malaysia with a 2 month tenure. I told the bank to just auto-renew it on maturity with the same tenure. It’s only a small amount (around Php 45k) but the interest rate is 3.00% P.A. And I was informed that it is their lowest interest rate for a time deposit.

    I’m just wondering how BPI and East-West Bank came up with their interest rates. Isn’t it that you should get higher interest rate if you put more money in?

    Does it really mean that our economy is that bad?

    Well, can’t wait for Part 2 of this article.

    More power! 🙂

  8. Hi Sir,

    You may also consider BPI’s Special Deposits Accounts… it’s a savings/investment account with fixed annual interest with no tax. Shortest period would be 30 days, renewal after. It’s a government trust fund but not PDIC insured. But I believe it is safe since it is a government trust fund.

  10. Thanks for the bank suggestions. I’ll do my best to visit them.

    @Kiko,
    The problem with SDAs is that they require very high initial deposits, usually 1 million. Personally, I think it’s not wise to put that much money in a zero risk investment.

    While your financial plans should take priority, in my opinion, you’d be better spreading that money over zero, low, moderate and high risk investments for higher returns.

  12. Sir Fitz,

    BPI offers a minimal initial deposit for their SDA… I think at least 50K… for 30days/ with fix 3.2% (if i remember it right) Annual interest with no tax.

  13. BPI actually offers BSP SDA, with 3.05% interest PA tax free… with at least 30days retention period… then the settlement account must have an initial and maintaining balance of at least 5k.

  15. I have two plan ahead five years 6.25% interest per annum tax free compounded interest for five years with bpi-family savings.

    That tied down my money which however I am not in any need of.

    Then I still put money in sda’s also with bpi but not family savings on 30 days auto roll-over.

    But I was still looking for deposit accounts that will still pay more interest than sda.

    So I learned from my bpi-family savings bank staff that their plan ahead five years is now 4.5% per annum (or 4.75% because I am such a preferred client — that makes me feel so proud of myself), and as before I can choose to withdraw the interest monthly for my monthly expenses and also tax free, if I don’t want to tie down my money for five years with compounded interest.

    That is higher than the sda’s I put also money in through bpi but not family savings.

    Then the person entertaining me at bpi-family savings bank (bpi-fsb) told me the sda is now down in interest from a little over 4% to only now very recently 2.85%.

    Now, I am completely ignorant about how to make money from my idle money by
    investments or by bank deposits, I just ask the bpi and bpi-fsb for advice and recommendations.

    At this point I ask the person entertaining me at my bpi-fsb branch where should I put the extra idle money I still hold which I can just put away to make more money in banks or in investments what is that called, instruments?

    She told me if I put it in for 6 months term in some kind of I don’t know what fund, it will earn in 6 months time definitely net of tax still more than the 6 months accumulated monthly interest payments of the plan ahead five years tax free deposit.

    I really don’t know what she is talking about, except that it earns more than the plan ahead tax free five years term time deposit.

    Well, to make a long story short, on the maturity date four days ago of one of my sda, which if I now roll it over is just going to earn me 2.85% interest gross of tax and service fee etc. else whatever, I for an experiment put .5 million pesos in that 6 months deposit whatever which is going to earn more than the plan ahead etc,, even though its earning is gross of tax and service whatever.

    Okay, this is the assurance the person (as. bus. manager) and the business manager of this bpi-fsb gave me:

    1. It will earn in six months more than the accumulated also in six months interest of the plan ahead deposit of five years term.

    2. I can get the interest earned and also the principal and not put back any money in this scheme whatever, or return the interest and principal back for another six months, or just the principal.

    3. I will not lose my principal money or see it reduced in numerical quantity.

    So, it is really very good, much better than the five years plan ahead.

    The advantage is that it earns more in interest and I can withdraw it in 6 months time.

    But I really don’t know what it is and how it works.

    The as. bus. manager told me one of their girls is also buying whatever whenever she has some spare money, which she often has because her family is already wealthy even though she works to keep busy, and the manager herself when she has some blessings meaning spare monies she buys it also whatever that is.

    I put my big idle money in two big five years plan ahead time deposits tax free and interest compounded etc., but I always worry that I might need to terminate them for any emergency in the family which however I don’t foresee any, in which emergency then I would be penalized etc. for pre-termination.

    Now, with this scheme of 6 months deposit and the interest payable monthly and the deposit or purchase whatever can be terminated on the completion of 6 months, I feel that I had missed a big opportunity to put all my idle money into several staggered accounts of 6 months each, and every six months I will choose one to cash on the interest if need be or terminate it, while the others are rolled over.

    That is certainly everything considered much better than any big interest tax free interest compounded etc., but with money tied down for five long long long years.

    So, for the present I really put down .5 million pesos last Friday in that scheme just to see what happens at the completion of 6 months.

    Yes, they asked me to take a survey, and they told me from the survey I answered I am a conservative investor whatever, but I will still earn more than putting money in the five years plan ahead time deposit.

    I ask you, what is that scheme all about which they convinced me to go into?

    And is it really that good?!

    How come I get the impression that not many people are lining up to go into it?

    They told they don’t bring up that scheme to any depositor, that makes me feel oh so proud – hahahaha!

    What do say you?

    I ask fund experts in a money forum to make use of my idle money and just give me every month 25% of earnings they succeed in making from my money, and they keep 75%.

    But if the money gets lesser then they have to add to it to bring it up to equal the last balance before it got reduced in numerical quantity.

    No one has accepted this challenge so far to date, and I thought that these guys are very good at making money for people with idle money.

    What do you say about that?

    Mdejess

  17. Sau binigay ng bpi 2.125 int. e ang posting nila 1.250 int highest time n un for reg time deposit 500k-1M? What is that? Bargain? To attract cust? Bias? OMG!!!

  18. nice one. i am motivated now. time deposit seems nice and safe.
    btw, what is risk assessment? do you have some articles about that?

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