Monday, November 08, 2010

Bank interest rate - discriminatory practices

Some banks offer higher interest rate to attract new deposits and give a lower interest for existing deposit. A customer can earn the higher interest rate by taking the trouble to withdraw the deposit and re-deposit it with the same bank. If the customer expresses the intention to take this trouble, the bank will usually relent and offer the higher interest rate.

The bank is willing to pay a higher interest rate (compared to the miserably low interest rate that is offered to their existing customers). But they hope that some customers are not aware about the difference, or that they do not wish to take the trouble, or do not know how to take the action. The bank hope to extract the maximum profit from these customers.

I consider this practice to be discriminatory and unfair, and goes against the ethos of fair treatment of customers. Some people say that this type of practice is predatory and dishonest. I believe that it has some of these negative elements. Even if it is not illegal, it is quite wasteful to get customers to go through a lot of hassle to enjoy a more adequate interest rate and cause unproductive work for their own staff.

I hope that the Monetary Authority of Singapore will tell the banks that they (the regulators) frown on type of unproductive and discriminatory practices. I am sure that the banks will heed the message from the regulators.

Tan Kin Lian

1 comment:

Redstar said...

In the past, before the merger of the banks into three big super banks, we had better higher interest rates with competition from OUB Bank, Keppel Bank, Tat Lee etc.

I also remember the Keppel Bank staff for their excellent customer service. They greeted me by name even though I wasn't a big fish in their client database.

Recent history have shown big banks have the tendency of being "too big to fail" resulting in bailouts with taxpayers' money. I hope this doesn't happen to DBS, UOB and OCBC when our property bubble burst like Dubai and Japan.

Banks must care for their clients' interest first. And they should stop paying negative real interest rates to depositors.

Banks should pay higher rates to Singapore citizens and lower for non-citizens. Age > 45 years must also receive a higher interest to fund their retirement. This is true social responsibility in action instead of bullying the weak and ignorant segment of the population.

Unrealistic interest rates or easy money creates artificial booms which ultimately end in despair and depression. The blood of the innocent will be sacrificed to cover the big black hole in the US economy. It is a trick of evil men, be very careful.

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