Time deposits are very popular among Philippine savers, both small and big ones, because they guarantee earnings from cash you are sure to get back after a certain period (normally 30 days, 90 days, and 180 days). That’s of course assuming that you chose the right bank (hello Rural Bank of Parañaque?).
I once wrote about a Chinese businessman who lived on his P50 million placed in a time deposit account rolled over regularly. He enjoyed it so much that he believed renting a house for P85,000 a month in a posh Quezon City subdivision was better than buying his own home, because doing so would reduce his stash of cash.
In the US, investors maximize time deposits (more commonly known as certificates of deposits) by using a strategy called “laddering.” This simply means spreading your money in CDs with different maturity dates, so that you get regular income from them. By doing this, you make sure that you don’t have to withdraw from your time deposits prematurely and suffer from the steep penalties.
I made a few calls to the top three local banks and one thrift bank and here are their time deposit rates:
P10,000-below P50,000
BPI –- 2.25% (30 days) -- 2.625% (90 days)
BDO –- 1.875% (30 days) -– 2.75% (180 days) -– 2.875% (360 days)
Metrobank –- 1.25% (30 days) –- 1.75% (90 days) –- 2% (180 to 364 days)
PSBank –- 0.5% (30 days) –- 0.5% (90 days)
P50,000-below P100,000
BPI –- 2.5% (30 days) –- 2.75% (90 days)
BDO –- 2.25% (30 days) -– 3.25% (180 days) -– 3.375% (360 days)
Metrobank – 1.5% (30 days) –- 2% (90 days) – 2.25% (180 days to 3.64%)
PSBank –- 1% (30 days to 90 days)
P100,000-below P500,000
PSBank –- 3.5% (30 days) –- 2.75% (90 days)
BPI -– 2.625% (30 days) -– 2.875% (90 days)
BDO –- 2.5% (30 days) –- 3.25% (180 days) -– 3.375% (360 days)
Metrobank -- 2% (30 days) –- 2.5% (90 days) -– 2.75% (180 days to 364 days)
P500,000 to below P1 million
PSBank –- 3.75% (30 days) -– 3% (90 days)
BPI –- 2.75% (30 days) -– 3% (90 days)
BDO –- 2.5% (30 days) -– 3.25% (180 days) –- 3.375% (360 days)
Metrobank –- 2.25% (30 days) –- 2.75% (90 days) –- 3% (180 days to 360 days)
P1 million to below P5 million
PSbank –- 4% (30 days) –- 3.25% (90 days)
BDO –- 3.25% to 3.5% (30 days) -– 3.625% to 3.75% (180 days) –- 3.75% to 4% (360 days)
BPI –- 2.875% (30 days) -– 3.125% (90 days)
Metrobank -– 2.75% (30 days) –- 3.25% (90 days) –- 3.75% (180 days to 360 days)
Some interesting revelations:
- It pays to shop around for the best rates.
- Some banks significantly rewards bulk deposits. Note that BPI has the best rates for deposits in the lower brackets but towards the half-a-million-peso level, its rates are taken over by PSBank and BDO.
I've been reading a lot about this and I really find your articles very interesting perhaps you can help me find some good seminars on this. :)
I have a peso time deposit account at Chinabank, which I just keep rolling over. And I must say, their rates are competitive with the banks you've mentioned.
Here are Chinabank's rates:
P5,000 to P49,999: 2.500% (30d); 2.250% (60d)
P50,000 to P199,999: 2.750% (30d); 2.500% (60d)
P200,000 to P499,999: 3.000% (30d); 2.750% (60d)
P500,000 to P999,999: 3.250% (30d); 3.000% (60d)
P1M–P4,999,999: 3.500% (30d); 3.250% (60d)
P5M and up: 3.750% (30d); 3.500% (60d)
Everything's subject to the usual 20% withholding tax of course.
And speaking of rural banks, is the Rural Bank of Makati a good bet? I hear they offer interest rates of up to 12%. Not as spectacular as those of banks that have closed. But does that mean it's safe to maintain a TD account with them?
hi packedmeals, thanks so much for sharing this information. The more information, the merrier!
as for Rural Bank of Makati, you have to do your due diligence. Find out how long it has been in operation, what is its track record, how well is it capitalized, what is its non-performing loan level, how many branches it has, who owns it, who are managing the bank, etc. The information you gather will of course not guarantee the safety of your funds, but they will at least give you an idea where the rural bank stands as to safety. The Bangko Sentral ng Pilipinas website is a very good resource: http://www.bsp.gov.ph. Ultimately, this is a personal decision, as I said in my post. Would you be willing to trade stability with the higher interest?
hi Salve,
Quick question on the PSBank rates...it seems it different from the other banks...i.e. why are the rates lower for 90 days compared to 30 days ?
For 100k
PSBank –- 3.5% (30 days) –- 2.75% (90 days)
For 500k
PSBank –- 3.75% (30 days) -– 3% (90 days)
hi avid reader: PSBank believes that rates are going down, hence their time deposit rates. I noticed that the Chinabank rates shared by packed meals are also going down.
Thanks Salve, I always thought that the longer you put your money into the time deposit, it would translate to higher interest rates. but based on your comments / actual figures above, it seems that it depends on the bank on how they perceive the interest rate would go in the long run. More power again to your very informative blog :)
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Do you have US$TD? for Expat Pinoys i think that's a good bet. I am disappointed though with BDO. Last year a $2K for 3 months has rate of 1.5% but this year I placed the same amount and the rate dropped down to 0.75%.
there are rural banks that also gives higher rates beside legacy banks. specially in rural areas where there are no big banks.
Reasons why rural/thrift/coop banks can give higher rate is that the are treated differently by BSP in taxes and others since they cater microfinance.
I treat big banks and small banks same because the PDIC that suppose to insure them is one and same. Yes small banks will close faster than big banks if problem arises but still there is the PDIC that gives us confidence for only 250k.
The only question, is PDIC that reliable. We can leverage from this legacy fiasco on how they will handle this. Because in this tough time, we cannot just say big banks are stronger than small banks.
Salve, another strategy is to ladder the 5Yr time deposit placements (Ofcourse, yung galing sa big banks).. Para ma avoid yung 20% withholding tax. Mas mataas pa interest rate. ^_^
Most banks want you to stay in the short end of the curve ( 30d ) rather than the medium term ( 90d ) by offering higher rates for 30-d TD than in 90-d TD, to keep their costs low. In November 2008 I rolled over my TD with a certain bank to the 90-day term to lock in 5+% rate, speculating that rates will go down by 2009. My mistake here is that I did it by phone through the branch manager. Three months later, I was shocked to find that they didn't carry out my request/instruction, and instead the branch rolled it over every 30 days, for an average rate of 3%. I promptly closed my account with Chinabank.
How about BSP's SDA? I heard banks give higher rates in SDA than normal time deposits.
Another alternative is the credit cooperatives. I have a small amount of money put into our cooperative in our government agency which I keep rolling over at 4.5% compounded interest.
Hi Salve,
Paano ko kaya malalaman na merong offer ang BSP gaya ng item # 2. Coupon Rates on Fixed-Rate Treasury Bonds?
Do they announce this type of T-bond ?
Did you post in your blog their (BSP) announcement?
How much is the minimum amount?
Can you please share to me or do you have any link?
Many thanks,
=================================
BSP INTEREST RATES (% p.a.)
http://www.bsp.gov.ph/statistics/keystat/winteresrates.htm
Coupon Rates on Fixed-Rate Treasury Bonds
(Auction Date: February 17, 2009)
10 Years 7.875%
7 Years
Last question, is it tax free?
10 Years = 7.875% interest p.a.
http://www.bsp.gov.ph/statistics/keystat/winteresrates.htm
Thanks again
Hi Salve,
How about MSD at Allied Bank which gives slightly higher interest than TD, i have a MSD for 30 days of 1M plus and keep rolling, can i consider this a safe? shall i continue this with Allied? Please advice
I have time deposits at one of the Legacy Rural Banks and will now lose some hudredthousand Pesos. Still, all in all I did not lose because for some years I had the 20% interests.
Why I choose that bank? There are some reasons. First, nobody ever told us that the bank belongs to the Legacy group, always we have been told it is priovaley owned by a former Consul General who usually should be a honest man. Then, checking if 20% are really possible, it came out that they charged loans by more than 30%, so the 20% are very possible. Another reason was that several other banks, including the very big banks, also offered "double your money" schemes, with different terms and interests. Lastly, every bank counter had a PDIC label, telling that deposits up to 100.000 and later 250.000 Pesos are secured. Nothing about only one deposit per depositor per bank as what PDIC is now using. Not only the Rural banks explained that depositors should split their deposits to the maximum secured amount and nobody ever explained that PDIC would not even splitting to different branches cover. Which means that for security, a depositor has to deposit maximal 250.000 to one bank,not branch, and therefore never can avail of the higher interests for bigger amounts. A really stupid system, or it is only now used in that sense since PDIC has to pay.
How a bank depositor should know that an officially offered scheme is not accepted if the bank is duly accredited at BSP and is member of PDIC? I am very sure that in some other countries PDIC would be liable for at least not publicly warn that they would not cover the offered schemes and would have to pay fully ll legal deposits. The same BSP which could also have made public that it does not accept such schemes.
Moreover, if it is true that delos Angeles was financing campaign expenses of the Vice President and later became appointed as Housing boss of the government, who would ask about his credibility?
Therefore, it was a complete nonsense of a certain Congressman to say that depositors who limited their deposits to the maximal secured amount are practically supporters of the crimes of delos Angeles and should be investigated.
Top Five stable banks in the Philippines .... any idea?
hi salve,
Sa Plantersbank po, see below, ganito ang offer nila. Matatag po ba ang Plantersbank? Ano ang alam ninyo tungkol sa Plantersbank?
Plantersbank Premium One
A one-year time deposit with a minimum placement of P50,000t
Competitive interest rate of 5.75% (gross) per annum
Interest credited on the same day of deposit and withdrawable on the 5th banking day
Up to 80% of deposit eligible as loan collateral
Principal withdrawable anytime (subject to pre-termination rules)
Plantersbank Premium Five
A five-year time deposit with a minimum placement of P50,000
Competitive interest rate of 6.25% (net) per annum
Interest is automatically credited monthly to your designated current or savings account
Up to 80% of deposit eligible as loan collateral
Free insurance up to P1 million**
Principal withdrawable anytime (subject to pre-termination rules)
i made the same survey a few months ago regarding for the best rates for dollar time deposit. i ended up opening one at a savings bank with main office on paseo de roxas :P
Hi guys! Looking at the rates for the 360 days or 1 year, I see it's quite close to the rates that money market funds are getting. I know money market fund rates are not fixed or guaranteed, nor are they insured by PDIC.
So my question is, what would you choose? would a 1 to 2% increase in rate be enough for you to choose a money market fund over a TD? If not, at what interest rate would you want to get before shifting from a TD to a UITF or MF?
Mga katoto, mayroon din pong mga 3 to 5-year deposits if you are interested in banks such as BDO, Planters or even Land Bank. Of course Banco Filipino din.Locked-in mga yun, depends on the bank, some are computed net/tax free and monthly crediting sa inyong passbook.FYI
the TDs for BPI are for 35, 63 and 91 days. hindi na sila kagaya ng ibang bank na 30, 60, 90. among the commercial banks, chinabank offers one of the highest interest rates for TD. check its diamond savings.
Thanks a lot Salve for featuring this comparison of interest rates. I've been contemplating of diversifying some of my funds to a time deposit.
I think BPI-Family and BPI Direct accounts offer better rates than BPI. As these belong to the same company, they are worth a look. BPI Family has a 5year TD at 6.2%/annum.
Monb: It is not simply a matter of interest rate before you can substitute one product over another. Need to consider also the expected rate of change or uncertainty. TD rates also mirror conditions in the market for UITFs.
I don't get it, I found the current interest rates for Time Deposit in Metrobank in their website. As I see, for 1,000,000 to 4,999,999, there is a 7-day period that has an interest rate of 2.00%.
Does this mean that for every 7 days, the money deposited (let's say 1M), earns 388.89Php or 140,000Php in a year? So, it should be better to time deposit at longer time, regardless of other considerations?
Hi! Let me help AJ out.
Hello AJ! Your computation was a bit incorrect. Given the data that you gave, 388.89 php is the interest rate per 7 days. (You got this one right.) However, if you avail of this for the whole year, the total interest would only be around 20,000 php. This is computed by using the formula 388.89 x (360 / 7) or you can use the original formula which is 1M x 2%.
I think you got confused because you multiplied 388.89 by 360 days which would make it incorrect because the interest rate you gave is for a 7 day period and not on a per day basis. I hope this helps. ^^
You might want to check out my site for other personal finance articles at
Money Magnets: Earn and Save Money Now!
and
The Pinoy Entrepreneur
about the 7 day term @metrobank
so if you put 1M on a 7 day term it will be 20 000 pesos...right?so in a month can you make 80 000?
rural and thrift banks like first country bank can give higher TD interest rate but of course, depositors must do their research about the stability of these banks
@jaybalot: there is no such thing as 7-day. usually, the minimum is usually 30-days.
i think that there will be a deduction of 20% in the interest in some TD's. Then divide the amount with 12, that will be the monthly interest pay-out
I have one time deposit in BPI family savings for 2m (5yrs.)and it generates 10thou per month, just a nice allowance for my mom. Interest goes directly to her atm account.
Is that a good investment? I want to do another one in Jan. Is there a better rate in different banks? Or better plan? Can you suggest a better way?
Hi Salve,
Good day!
Meron po akong excess na 200K. Gusto ko po sanang i time deposit. Pero naguguluhan po ako kung anong bangko at ano po ba ang mas magandang i time deposit, Peso o Dollar?
Thanks po!
thank you for this very helpful article... i've been looking for the different TD rates... you save me time instead of getting them firt hand. thanks lots. :)
ate salve
hello po.
P100,000-below P500,000
BDO –- 3.25% (180 days)
P2437.5 =(150000 x 3.25% x 180) / 360
tama po ba?
saka tanong ko lang po kung ano po yung
20% withholding tax?
saka kung pano po yun i compute sa given example ko po.
thanks. C=
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Could the data not be displayed in a table... It's not particularly easy to read and understand in this format?
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Very difficult to understand that data in that format.
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I always wondered how this worked. This is important when you are dealing with peoples money. Keep up the good work.
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The Chexsystem helped me to verify the rates at the bank where I have my money and now I feel a lot more safe with my money .
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Fixed Rate Savings Accounts
called “laddering.” This simply means spreading your money in CDs with different ma cosmetic bag supplier
Hmmm, I always thought that the longer you put your money into the time deposit, it would translate to higher interest rates. but based on your comments / actual figures above, it seems that it depends on the bank on how they perceive the interest rate would go in the long run, thanx.
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He enjoyed it so much that he believed renting a house for P85,000 a month in a posh Quezon City subdivision was better than buying his own home, because doing so would reduce his stash of cash. In the US, investors maximize time deposits (more commonly known as certificates of deposits) by using a strategy called “laddering.” This simply means spreading your money in CDs with different maturity dates, so that you get regular income from them.
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I see it's quite close to the rates that money market funds are getting. I know money market fund rates are not fixed or guaranteed, nor are they insured by PDIC.
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what would you choose? would a 1 to 2% increase in rate be enough for you to choose a money market fund over a TD? If not, at what interest rate would you want to get before shifting from a TD to a UITF or MF?
This is such a great way to save money. The interest rates are so good for savings. People should take advantage of this. Meeting Planners
A really stupid system, or it is only now used in that sense since PDIC has to pay.
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ANZ Time Deposits provides security with a fixed rate of return over your selected fixed investment term. If you need a regular income from an investment, and do not require immediate access to your Ginault Watches, an ANZ Time Deposit could be an ideal solution for you.
ANZ offers time deposits in the following currencies:
* Philippine Peso
* United States Dollar
* Australian Dollar
* Euro
* New Zealand Dollar
Benefits at a glance
* Competitive interest rates
* Variety of short to medium term lengths
* Secure regular income during the fixed investment term
The best way to make money with this method is not to choose the bank with the highest rate.I guess from my opinion that you need to find the bank with the highest security.So why do you want to make some money and have a lot of stress because you don't know if you will get your money back instead of taking a smaller sum of money for sure.3GPP Diameter
I have lost my faith in banks in general. Last time I had a deposit was about 10 years ago. Smart people nowadays know about spread betting and invest money wisely. The return on investment is much higher and risks are low. Just do a search online and learn more about this asap.
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