28 April 2016

Why HIGHER Fixed Deposit Rate is a BAD news to you ???

Maybe due to the unfavourable market environment, many people are flocking to place their money in bank Fixed Deposit. Coupled with aggressive FD promotions dished by almost all the banks recently, it was like an "FD heaven" win-win situation for both banks and depositors.

Why "win-win" situation?
You must understand why banks are willing to offer you higher FD rate, especially during uncertain business environment currently. Obviously, it's all because lacking of money.

Why is this BAD news to some of us?
Because of higher FD rate offered, the cost of funding of that particular bank will be higher as well, thus, it may affect the base rate (BR) subsequently. Of course, the effect will be higher interest being charged to loan borrowers. Do you still remember how BR being determined? Find out here via our previous article 'Understanding the new Base Rate'.

We heard that Maybank offers one of the most attractive FD rate !!!
The effective rate is 4.30% !!!
Good luck to all loan borrowers.
But, this is really good news to non-loan borrowers only...

How to mitigate the negative effect ?
Capitalised on the promotional FD rate offered. That's the only way you can do. Otherwise, the worst case scenario for consumers was "Didn't enjoy the FD rate, but was having loan facilities with the bank". Opppsss.

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