Tax time: Review your Income Sources…

It’s nearly tax time here, and as usual all the banks and financial organizations that you do business with have sent out their paperwork. So now is a good time to review those sources of income.

I received a tax paper from HSBC bank just last week. I took a quick gander at the paper only to discover that the interest that HSBC paid me for last year amounted to just NT$280 for NT$150,000+ deposits (and no, it wasn’t a checking account). That amounts to about 0.2% pa. How little is that? That’s like 3 Americanos at Starbucks.

So I decided to close that account and move that money into an account earning more than 10X that. It’s wise from time to time to check your savings accounts and make sure of the interest rate on each particular account. Banks are well known, especially in the UK and US, for having teaser rates that go down quickly, and some accounts become quite uncompetitive in triple time. So you have to keep checking online or in the newspapers about your bank account’s interest rate, to make sure you’re not losing out. There’s no sense in letting banks make free money off your investments.

Both Citibank and HSBC here offer higher rates than 0.2% on demand deposits, but both of these banks have minimum requirements for deposit amounts. I noted though on closer inspection that in Taiwan, the HSBC minimums were lower than Citibank, but that the Citibank interest rates were much more competitive than HSBC. In fact, HSBC has been running a promotion for their HSBC Direct service that promises to pay much higher interest rates than other banks. And it’s true, the deposit rate is much higher, but when compared to Citibank’s rates, it is about 25% less than you could get with more careful saving.

So it pays to shop around for your banking; it also pays to keep an eye on your savings, too; and don’t be attracted by teaser rates.