DEPOSIT rates are so low these days you might as well keep your money under your mattress.

TEXT & ILLUSTRATION: LARRY HAVERKAMP & MAROO

The 12-month fixed deposit rate for nine large banks averages 0.6 per cent. It means you earn $60 per year for every $10,000 that you deposit. That's $6 for every $1,000 and 60 cents for every $100. It's miserable.

A piece of good news is that not all banks pay such low rates. A new bank in town - CIMB - pays 1.2 per cent for a 12-month lock-in. It is twice the average rate of the other banks.

A word about CIMB: It has just come to Singapore from Malaysia. It opened for business two months ago.

9 BEST FIXED DEPOSIT RATES

While not well-known here, it is the third largest company on the Malaysian stock exchange with 36,000 employees and assets of RM230 billion ($95b).

It used to be Bank Bumiputra and after a series of mergers, the name changed to CIMB.

Banking regulations here restrict it to only two branches. One is at Raffles Place and the other on Selegie Road.

The next best deal comes from another Malaysian bank: Maybank. It pays 0.875 per cent interest for a 12-month fixed deposit. The minimum balance is only $1,000.

In third and fourth place are UOB and OCBC. Their interest rates are about the same as Maybank's but minimum balances are much higher, at $40,000 and $30,000.

If you don't want to be locked into a fixed deposit for a year, consider a current account, savings account (Casa).

It has no lock-in. You can even withdraw your money the next day with no penalty.

Casa accounts also link to a current account, which means you earn the savings rate on your checking.

I reviewed these accounts for all banks and the surprise winner is - you guessed it - CIMB with its 'StarSaver' account.

It pays the same as the 12-month fixed deposit - 1.2 per cent - which is again head and shoulders above the competition.

StarSaver is a 'step-up' savings account which forces you to save. The bank requires a $5,000 opening balance and $500 monthly top-ups.

The top-ups can be done through Giro or - more conveniently - by making a larger initial deposit.

For example, you could make a year's worth of top-ups in advance, which is $500 x 12 = $6,000. Add it to the initial $5,000 to open and it comes to $11,000. With that deposit, no further top-ups are needed for a year.

If you want to keep a lower balance, a way to beat the system is to close your account after, say, six months and start afresh with a new account requiring the $5,000 initial deposit.

Most banks offer promotions requiring fresh funds. A problem is when the offer ends, the bank rolls over the fixed deposit at a lower rate, usually the board rate. CIMB and Maybank are exceptions in that they roll over at their best rates, shown in the table. See www.AskDrMoney.com for weekly updates of fixed deposit rates.

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Risk-free until 31 Dec 2010

Foreign banks typically pay higher interest rates as they are perceived as slightly riskier. That is because in a worst case scenario, the Government would likely step in to save the three local banks but not foreign banks.

The financial crisis, however, resulted in the Government guaranteeing bank deposits through 31 Dec 2010. It means deposits in all banks are treated alike and are risk-free through the end of next year.

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