Advertisement

Tong soon

08 May 2020

∙

General Investing

Why did OCBC terminate my Fixed deposit of 2.05%?

2 years ago, a dumb me had put in $60k into OCBC structured deposit, which would earn me a 2.05% p.a over 6 years. Im glad i got that back as OCBC exercised their rights to terminate this fixed deposit early.

Based on the current economic climate, wont banks be in need of money though? Im trying to understand how this all works.

2

Discussion (2)

What are your thoughts?

Learn how to style your text

Aik Kai

08 May 2020

Banks earn money by margin. Simple example, You deposit with them $60K at 2.05% interest per annum. They take the money and loan to other people at 3% interest (or more) per annum. So they earn the difference in interest.

Banks need money now, of course. But with the economy so bad, it means loans are not doing well. If their loans are not doing well, they will lose more money if they have to pay you interest.

Simple example. OCBC loan a business $60K at 3% interest. If the business is not paying back the loan, OCBC is losing money by paying you 2.05% interest. To them, terminating your FD means they are saving cost as they don't need to pay you the interest.

Hope this helps in a bit.

Cheers

Reply

Save

View 1 replies

Write your thoughts

Related Posts

Hello! I'm planning to put in 10K, as a fixed deposit for 5 years, to earn some interest, under CIMB Why Wait fixed deposit Scheme (1.8% p.a if done online). Is this a good move?

I am 25yo this year, saved around 50k. Been doing fixed deposits for quite a few years recently took out as I am planning to do investment, Are there any investments with higher returns than fixed deposit?

What are the prospects of SGD fixed deposit rates rising in the next 12 months?

Are there advantages in having a fixed deposit account and a savings account? Why do some people put money into a FD account, instead of say, putting everything into a savings account (e.g. DBS Multiplier)?

For a conservative and risk-averse person, is putting my spare cash in fixed deposits a good idea? Saw that CIMB is giving 1.84% interest for locking in my funds for 1 year, any opinions? ?

Related Posts

Hello! I'm planning to put in 10K, as a fixed deposit for 5 years, to earn some interest, under CIMB Why Wait fixed deposit Scheme (1.8% p.a if done online). Is this a good move?

I am 25yo this year, saved around 50k. Been doing fixed deposits for quite a few years recently took out as I am planning to do investment, Are there any investments with higher returns than fixed deposit?

What are the prospects of SGD fixed deposit rates rising in the next 12 months?

Are there advantages in having a fixed deposit account and a savings account? Why do some people put money into a FD account, instead of say, putting everything into a savings account (e.g. DBS Multiplier)?

For a conservative and risk-averse person, is putting my spare cash in fixed deposits a good idea? Saw that CIMB is giving 1.84% interest for locking in my funds for 1 year, any opinions? ?

Advertisement