Bank Deposit Rates vs. Inflation Rates in the Philippines

Bank Deposit Interest Rates vs. Inflation Rates in the Philippines

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Note: This was previously published in my other blog that I had already taken down.

Earlier while we’re having lunch in the Limerick (in Ireland) office, our conversation flew into financial matters and I was asked, “How much is the interest rates of banks in the Philippines?”. I struggled to say anything because I was always engrossed with Mutual Fund growth rates instead of the bank deposit rates.

I kept on blabbing, saying random small numbers that would cross my mind.

I have ignored bank interest rates because I know putting my money in the bank won’t do outstanding growth for my money. Why, you ask. Because dearie, the inflation rate of our country is double the largest deposit interest rate, which only applies if you have leave Php10,000,000.00 deposited in your bank. And, it should be untouched for a year.

So, again, I mumbled a weak blah-blah percent while thinking about the interest that is in question. Is it a loan interest? Bank deposit interest? Hah. My weakness is me talking about things that I don’t really really know. And there were foreigners with us — an Indian, a Congolese, an Irish and Filipinos.

Good thing my fellow Pinoy who is working there was able to answer that for me. He said 1%.

(Sigh of relief.)

Okay, I could have contributed much to the conversation if we’re talking about Life Insurance and Mutual Funds.

My intended ignorance was further supported by Randell Tiongson‘s Facebook status a month back. To quote,

 

So, yeah, I may have gone overboard in ignoring the deposit rates of banks here in the Philippines, but now I should be at least aware. After all, I am keeping my emergency fund in one of these banks. And, I might as well share that with you guys here.

Before you go dizzy staring at table, please know that you can SORT them out by typing in the bank or account type on the Search button on the upper right of the tables. Thank you! 

This is a compilation that I made based on the official websites of the identified banks. I’ll try to keep them updated as possible. For now, these are the interest rates as of January 2015.

Bank Deposit Interest Rates in the Philippines

BankAccount TypeInitial Deposit (Php)Minimum Monthly Amount (Php)Minimum Monthly Amount to Earn Interest (Php)Interest Rates
Bank of the Philippine IslandsSavings Account500.003,000.005,000.000.25%
BPI Family Savings BankSavings Account500.0010,000.003,000.000.50%
Banco de OroSavings Account2,000.002,000.005,000.000.25%

East West BankSavings Account2,000.002,000.0010,000.000.25%
Metro BankSavings Account2,000.002,000.0010,000.000.25%
Banco de OroPassbook Savings5,000.0010,000.0010,000.000.25%
East West BankPassbook Savings5,000.005,000.0010,000.000.25%
BPI Family Savings BankPassbook Savings10,000.0010,000.0025,000.000.50%
Metro BankPassbook Savings10,000.0010,000.0010,000.000.25%
Bank of the Philippine IslandsPassbook Savings10,000.0010,000.0025,000.000.25%
Union BankSavings Account25,000.0025,000.0025,000.000.10%

Time Deposit Interest Rates in the Philippines

Meanwhile, here are the time deposit rates here in the Philippines.

BankPrincipal Range (Php)~30 Days~60 Days~90 Days~180 Days~360 Days
Bank of the Philippine Islands50K to < 100K0.5%0.5%0.5%0.75%0.75%
Bank of the Philippine Islands100K to < 1 M0.625%0.625%0.625%0.875%0.875%
Bank of the Philippine Islands1 M to < 5 MM0.625%0.625%0.625%0.875%0.875%
Bank of the Philippine Islands5 MM and over0.75%0.75%0.75%1.00%1.00%
BPI Family Savings Bank50K to < 100K0.75%0.75%0.75%1.00%1.00%
BPI Family Savings Bank100K to < 1 M0.875%0.875%0.875%1.125%1.125%
BPI Family Savings Bank1 M to < 5 MM1.00%1.00%1.00%1.25%1.25%
BPI Family Savings Bank5 MM and over1.125%1.125%1.125%1.375%1.375%
Banco De Oro1k to <50k0.25%0.25%0.25%0.50%0.50%
Banco De Oro50k to <100k0.375%0.375%0.375%0.625%0.625%
Banco De Oro100k to <500k0.50%0.50%0.50%0.750%0.750%
Banco De Oro500k to <1M0.625%0.625%0.625%0.875%0.875%
Banco De Oro1M to <5M0.750%0.750%0.750%1.00%1.00%
Banco De Oro5M and over0.875%0.875%0.875%1.125%1.125%
Metro Bank10k to <50k0.250% 0.250% 0.250% 0.500%0.500%
Metro Bank50k to <200k0.250% 0.500%0.500%0.750%
0.750%
Metro Bank200k to <500k0.375%0.625%0.625%0.875%0.875%
Metro Bank500k to <1M0.500% 0.750% 0.750% 1.000%1.000%
Metro Bank1M to <5M0.625%0.875% 0.875% 1.125%1.125%
Metro Bank5M to <10M0.750% 1.000% 1.000% 1.25%1.25%
Metro Bank10M and over0.875% 1.125%1.125%1.375%1.375%
East West Bank10,000.00 (minimum)Based on prevailing market ratesBased on prevailing market ratesBased on prevailing market ratesBased on prevailing market ratesBased on prevailing market rates
Union Bank50,000 (minimum)Fixed for chosen placement term; subject to rate adjustments if pre-terminatedFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustments

Inflation Rates in the Philippines

You know what inflation rate is, right? It’s the sustained increase in the general level of prices of goods and percentages, measured as a yearly percentage increase.

Our inflation rate has become steadier to 2%-4.5% over the last four years. It was worse back in 2009. It was around 7%. The lower the inflation rate is, the better. We only have an inflation rate of only  2.3% this 2015.

source: tradingeconomics.com

The Analysis

If you compare the highest deposit rate in the banks (0.50% for savings, 1.375% for a 5-M to 10-M time deposit), it would still not be even equal to the lowest inflation recorded for the past few years (2.3%)!

If you’re keeping all of your money in a jug, it’s like you’re letting water out of that jug faster than you’re letting the water in. There’ll come a time when your jug will become empty.

If you put your money in the bank, it will just lose its value in there. Don’t commit this financial mistake.

The Question, You Think About It


Will you still place all of your money in the bank now?  Now that you have seen the actual deposit rates of the banks versus the inflation rate, would you still feel safe keeping all of your money in the banks?

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