Dear readers, I read a letter to a local newspaper forum earlier this morning which mentioned how an individual’s fixed deposit with a local bank was auto renewed, but at an ordinary 0.1% per annum (likely to be the bank’s board rate, as compared to the much higher fixed deposits on offer in the market these days). The letter writer seemed to wonder on the rationale of such a low renewal interest rate given the high interest rates these days.
I can actually relate to the reader. Some years ago, before interest rates are as high as now, I parked some of my monies in a local bank’s fixed deposit. When the fixed deposit matured and I was about to liquidate the fixed deposit, I was surprised to read that the fixed deposit has already been auto-renewed for another year, at a humble 0.05% per annum (when other interest rates are already going up). I was unaware of the renewal terms of conditions.
And not only that, if I withdraw my monies earlier, there will be a penalty, hence I have had no choice but to keep my fixed deposits at 0.05% per annum for yet another year, while forfeiting opportunity costs.
I really believe that some banks here should really walk the talk, to think for the customer. It is not just about doing the right thing in line with the bank’s SOPs like renewing a fixed deposit automatically if customer does not redeem it at maturity.
It is also about being practical. I believe customers will definitely not mind not to have their fixed deposits locked and renewed at such low interest rates as they can deploy the liquidity elsewhere to earn higher interests these days.