More and more attractive FD deals are in the market nows!
We always heard that eFD is convenient to place but the return is less attractive as compared with over the counter ("OTC") FD.
But, is it the truth?
Lets pick an example from Maybank (pic)
So, what is the trick that the banks are playing?
Apparently they are restricting the fund from Maybank to be placed in Maybank's eFD agai which means they are demading fresh fund from the market. If you withdraw before maturity, you will be only entitled to half of the interest rates (which are the lower rates).
Also, you cannot have a compounding effect from this through reinvestment of interest.The interest payment is required to be CREDIT to ACCOUNT again. To summarise, there is no snowball impact for you from month to month.
For me, a 4.31% interest rate is pretty decent for those that does not invest in other financial products or those that are looking easiest way to protect their capital.
Is 4.31% attractive?
My answer is both Yes and No.
YES! -Without going to the counter and get a 4.31%, I think its modest. (Of course, can we project that the popularity of eFD becomes the potential reduction for headcount in the banks? - They no longer require such amount of employees to standby on counter)
NO! - Nonetheless, if you read the news, our CPI for February rose by 4.2%. It means, your 4.31% eFD here barely beats the inflation rate.
From now on, I urge you to wake up and realise that your return is not lucrative enough for your own savings or retirment planning!
You own your finance!
Wealth Hunter
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