Martin Lee @ Sg
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FD Marketing Gimmick

My mum was asking me about a 3% p.a. FD rate that she saw in the newspapers the other day. The minimum sum required was $40,000.

3% for a fixed deposit at this time?

Surely there was a catch. To be precise, the rate she saw was 3.08% p.a.

The deal was too good to be true so I went to have a look at the advertisement.

In big bold print, there was the 3.08% p.a. figure. Beside it were the terms:

10/10 S$ time deposit rates* of 3.08% p.a. for the first 10 days and 1.05% p.a. for the next 10 months.

*effective interest rate of 1.11% p.a.

Just as I suspected, there was no free lunch. The bank gives you 3.08% p.a. for only ten days and then locks up your money with a 1.05% p.a. rate for the next ten months.

As pointed out in the advertisement, the effective interest rate was only 1.11% p.a.

What the effective rate means is that if you were to put your money in a FD with an interest rate of 1.11% p.a. for the same period of time, you will earn the same amount of interest as this promotion.

I wonder how many people are actually mislead by such marketing gimmicks.

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Leave a Comment:

Very Sian says 11 years ago

The authority is sleeping or close one eye. Banks pay a lot of tax lol. So we better “walk in with our eyes OPEN BIG BIG”….

Lung Eng says 12 years ago

Frankly, such misleading advertisements should not be allowed but the current situation is such that many other advertisements involving other products and services as well as some official statements given out by authorities are also put up in similar manner, half truth and yet not a lie sort, my advice is that readers should exercise due care to such practices and read between the lines before they decide. Never believe in the advertisement as it appears.

    lioninvestor says 12 years ago

    Hi Lung Eng,

    I agree with you. Such ads should not be allowed.

larry says 12 years ago

Eversince I heard about the remark years ago that quote “Banks are legalised LOAN SHARKS” unquote, I’ve been very cautious and use them as Transit Point. Never bought any Banking related products nor engaged in FDs whatsoever!
Never be greedy and look at MADOFF Securities? never trust anyone and “IN GOD WE TRUST”

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