*Article updated on 25 May 2021*
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Being Singaporeans, it seems like it is a rite of passage for our parents to open up a POSB/DBS savings accounts for us as soon as we’re born.
However, as we might already know, the conventional banks offer yearly interests in exchange for growing your savings with them.
These might not be aligned with the values of our Singaporean Muslims.
Good news is, there are banks in Singapore that offer savings accounts that are Shariah compliant, in other words, in accordance to the Islamic law.
What that means is, the savings that the bank has collected won’t be used to generate interest or be invested in prohibited businesses such as gambling, weaponry and pork-related products, just to name a few.
How does Shariah compliant savings account works?
Despite those exclusions, Shariah compliant savings account holders will still be able to grow their savings in a form of hibah, or simply means gift.
To be able to provide the hibah sustainably, the banks grow those savings through Shariah compliant profits.
These banks will follow the advice from a panel of Islamic bank advisers to ensure that profit-generating activities are consistent with the Islamic law.
Today, the banks in Singapore that currently offer Shariah-compliant savings account build its foundation on either one of these Shariah concepts – Commodity Murabahah or Wadiah.
Quick recap – What is the difference between Commodity Mudarabah and Wadiah?
As you check out the comparisons later, you will notice that the hibah rates could vary quite differently, depending on the banks’ take between the 2 Shariah concepts – Commodity Mubarabah and Wadiah.
Commodity Murababah is based on the concept of profit-and-loss sharing, whereas, Wadiah corresponds on the basis of trust (Wadiah yad amanah) and savings with guarantee (Wadiah yad Dhanamah).
To put it differently, Murabahah (mark-up) is a Shariah concept where customers collect their returns in a form of profit, while the Shariah concept of Wadiah (trust and guaranteed safekeeping) allows customers to receive returns in the form of Hibah which is at the discretion of the Bank.
Hence, savings account based on Wadiah tends to have lower hibah rates because it takes on a lower risk per se.
Without further ado, here’s the 8 Islamic Savings Accounts that you should consider (ranked not in any particular order).
*Note that most of the Savings Account listed here have reduced their hibah rates since we last updated it in 2019. Quite a bummer, I know. However, I do believe having a Shariah-compliant savings account that aligns with our Islamic ethos still goes a long in the grand scheme of things insya’Allah.
1) CIMB FastSaver-i Account
Below are the hibah changes over the past 2 years.
Pretty significant, I know.
it was as high as 1% at some point, but now it has reduced to 0.3%. That is a 70% reduction.
It is structured in such a way that if you have anything less than $75,000 in savings, it is worth putting in there. Anything more, you might want to put it elsewhere.
One thing that I think worth mentioning for CIMB, across all of its savings accounts, is that it does not charge a fall-below fee, unlike its counterparts.
Yes – the initial deposit amount of S$1,000 might be a considerable barrier to some, especially for students. The good news is, you may consider creating an account and withdraw some of that amount at a later date without being penalized for the balance to fall below S$1,000.
However, do take note that in order to enjoy the above-mentioned hibah rates, you need to have that S$1,000 minimum amount in your bank account in the first place.
2) CIMB StarSaver (Savings)-i Account
Another type of savings account coming from CIMB, StarSaver (Savings)-i offers a hibah rate between 0.2 to 0.4% per annum.
From the above, you can see that it incentivizes you put your savings there if it is within between $200K-$1M, to enjoy the 0.4% p.a.
If you have lesser than $200K, might be wiser to have it in (1) FastSaver-i Account
Aside to that, it also offers free overseas ATM withdrawal.
3) Maybank i-SAVvy Savings Account-i
With the reduction in hibah rates from CIMB, Maybank hibah rates now looks more competitive.
Similarly to CIMB, it has also reduced its hibah rate as since we wrote in 2019.
As of date, it currently offers anywhere between 0.15% to 0.3% per annum, depending on the amount of savings you’ve made with them.
One saving grace is that, it offers a lower initial deposit amount of S$500.
Hence if you do not have much starting savings capital to begin with, this savings account could be ideal.
4) Maybank Ar Rihla Regular Savings Account
When the Ar Rihla Regular Savings Account was first launched back in 2011, it was meant to target the Singaporeans Muslims who wish to start a savings plan for their Hajj or Umrah pilgrimage to Mecca.
With an average of $11,500 for a Hajj pilgrimage and $4,000 for Umrah pilgrimage, it takes an average person to save about $200 or $70 per month respectively for 5 years in order to afford it.
For this savings account, you’re made to save at least $50 per month and make an initial deposit of S$200.
You may look at it as a disciplined savings plan in which you’re committed to save a minimum amount regularly, and by doing so, Maybank rewards you with some hibah (gift) at its discretion.
As per last updated on its site in 2014, its hibah rate stands at 0.7%.
But note that even the hibah rate is the highest of the lot, its distribution is at the bank’s sole discretion and may subject to changes.
5) CIMB StarSaver-i Account
StarSaver-i is pretty similar to the StarSaver (Savings)-i account, except that it consider as a Current Account.
What that means that you’re expected to keep a high daily balance of at least S$5,000 to enjoy the hibah rate provided.
As it stands today, hibah rate is 0.2% – 0.4% stands at 0.8% per annum. Pretty similar to its sister, CIMB StarSaver (Savings)-i Account.
As it is considered a Current Account, it also comes with a higher initial deposit amount of S$5,000.
A little incentive if you’re considering this – it comes with free cheque books. Might come in handy for self-employed individuals who are running sole proprietorship businesses to handle daily transactions with suppliers.
6) Maybank Savings Account-i
Another Wadiah-based savings account, this account looks like it is more targeting towards foreigners who are working in Singapore (with work permit) as it offers zero dollar initial deposit amount to start an account with.
For others, it requires a deposit amount of $500.
With its low barrier to start an account with, it has a relatively lower hibah rate of maximum 0.2% per annum.
7) Maybank PremierOne Account-i
This is somewhat an equivalent to CIMB StarSaver-i account, which is designed to target self-employed business owners who might need cheque books for their daily transactions.
Unlike CIMB StarSaver-i account, it has a lower deposit amount of S$1,000.
However, it also does come with a trade-off too with a lower hibah rate of a maximum of 0.20%.
8) OCBC Al-Wadi’ah Savings Account
Last but not least, we have OCBC.
Honestly, I had trouble looking for its information online as they do not specifically market this publicly on their website.
Hence, I emailed them directly and they followed up with a call a couple of days later to check on my interest.
Essentially, you will have to go down to their physical branches personally to open up an account.
Its hibah rate stands at maximum 0.05%, which is the lowest among others in this list, and at least $1,000 is required to open an account.
One standout feature though, it offers an auto-deduction for zakat based on the savings you’ve made in its account, so that is one hassle-free way to cleanse your savings.
Whichever the savings account we would like to go for, we just have to be mindful of how do we want to keep up, or at least close the gap, for our savings from eroding in value over time in the most Shariah-compliant manner.
As of 2021, the inflation rate is 0.34% as per Statista 2021 data.
Understandably, most of savings account here has a hibah rate of less than 0.34%, hence savings account alone is not enough and we should be prepared to allocate our funds in other Shariah-compliant investments too.
Now it’s your turn.
I’ve summarized the different Shariah-compliant savings account in Singapore from the various banks.
Now I want to turn it over to you. Which one are you planning to start an account with and why?
Let me know by leaving a quick comment below.