To be financially free, you need a handful of passive income investments in your portfolio. These are investments that you earn without too much effort. Examples are interest, rental payments, royalties, etc. These income sources just get credited to your account without you putting in hours of work.
Out of all, interest income is the most accessible for all. But then interest rates for banks are meager. I mean, an average of 0.5% per annum interest rate is quite negligible. And those time deposits around 1.5% to 1.75% is not that high considering you have to lock-in your money.
Is there a way to get a safe passive income that’s a little bit higher? That’s where online banks come in.
What are Online Banks?
Online banks are financial institutions similar to regular banks, except they don’t have any physical location. They operate purely online. You can deposit money through bank transfer via PESOnet/InstaPay or online check deposits via their app.
Advantages and Disadvantages
The advantage of online banking is high-interest rates. With the low operating costs, online banks can give out as much as 4% per annum for your deposits. They also don’t have any maintaining balance required and no fees for transfers to other banks.
With the high-interest rates, these are best to park your emergency fund. It can also be used for money you don’t need to touch immediately. And besides, most people transact online now, so the high interest is a great advantage for something you usually transact.
The disadvantage is that they don’t have their own ATM when you need to withdraw. And if your business or clients pay with cold hard cash, it’s quite troublesome to deposit it. But this can easily be remedied by using another bank account and transferring the money to the online bank for higher interest.
Just make sure that the online bank you will use is registered in BSP and has a PDIC insurance (500k insured amount). If you are looking for an online bank for you, here are the two best in the Philippines so far.
CIMB Bank (GSave)
The Commercial International Merchant bankers or the CIMB Bank is a Malaysian universal bank that operates an online bank service here in the Philippines.
As of the moment, the best offering they have is GSave. CIMB partners with Gcash to provide a high-yielding savings account connected to your GCash account. Here are the perks:
- No minimum balance
- No maintaining balance
- 3.1% per annum interest
- No minimum balance to earn interest
- Easy deposit and integration through GCash
- Free Life Insurance Coverage if 100,000 PHP ADB.
Take note; they also have monthly promos for higher interest rates if you meet specific criteria. If you’re interested, you just need to verify your GCash account. And you can already open the GSave account in-app.
ING Bank
The Internationale Nederlanden Groep Bank or ING Bank is a Deutsche bank that consistently ranks as one of the top 30 biggest banks in the world. In the Philippines, they offer online banking services that have unique perks for you.
- No minimum balance
- No maintaining balance
- You can make online check deposits
- No minimum balance to earn interest
- 4% PA interest (first 4 mos), 2.5% afterwards
- No fees and charges for transfers to other banks
They also have monthly promos like free cash incentives for additional deposits. If you’re interested, you just need to download their app and apply for an account there.
Should You Switch?
The offerings of these online banks are quite enticing. Should you switch your money? Well, that will depend on your needs. If your transactions are mostly digital anyway, why not take advantage of the high-interest rates?
If you can’t choose one, you can always have both! You can have a regular bank account for your ATM, check to issue, and payment receipts. And you can have an online bank to keep your money for high-interest rates.
There you have it! Which bank are you going to maintain? Cheers to increasing your financials!
