Your Bank Deposits are not 100% Gauranteed

In Singapore, your bank deposits are insured up to S$20,000 by Singapore Deposit Insurance Company (SDIC) in the event that the participating bank collapsed. All along people have been having the perception that putting money in the bank is the safest method to safeguard one’s asset. Since the collapse of big and reputable American banks during the 2008 financial crisis has shook the belief that banks are safe.

Are your deposits insured?

Your deposits are automatically insured if your bank is one of the Deposit Insurance Scheme members. In addition, only the following types of deposit are covered:

1) Savings accounts
2) Fixed deposits
3) Current accounts
4) Deposits under CPF Investment Scheme (CPFIS)

For No. 1-3, they are collectively insured up to S$20,000. For No. 4, CPFIS deposits in banks are separately insured up to S$20,000. For example, if you have S$10k in (1), S$10k in (2), S$10k in (3) and S$10k in (4), you will be refunded S$30k. This is because there is a maximum payout of S$20k from (1) to (3), and a separate payout of S$10k for (4), which make up S$30k in total.

It is important to note that if you have outstanding loans from the affected bank, your deposits will be used to offset the loan amount. This applies to both housing and credit card loans. For example, if you have S$10k deposits but an outstanding S$5k loan, you will only be refunded S$10k – S$5k = S$5k

If you have both personal and joint savings accounts in the affected bank, you are entitled to claim from both accounts but up to a limit of S$20k in total. The amount of deposits will be split equally between the 2 account holders.

Hence, it is only safer if you keep S$20k in your bank account and invest the rest to make your money work harder! If you have an emergency fund of more than S$20k that you have to keep it’s liquidity in cash, you should try splitting the deposits into different banks, with not more than S$20k in each of them.

SDIC site do have a good list of FAQs here.

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Tagged as: Saving Money

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