Bare Minimum: Here’s A Passbook Savings Account You Can Keep Up With

China Bank Passbook Savings

China Bank Passbook Savings has low initial deposit and maintaining balance requirement

I was browsing through some of the websites of local banks and I was pleasantly surprised to see this. For a relatively large, stable and publicly-listed bank, China Banking Corporation (China Bank) offers deposit products with such low requirements.

When opening a passbook savings account, aside from the documentary requirements, you’d want to look at three monetary requirements: 1) initial deposit requirement, 2) minimum monthly average daily balance, and 3) minimum balance to earn interest.

The initial deposit requirement is the first hurdle that you need to jump past. It’s the amount of money that you need to put in to open the account; anything less and you won’t be able to open one with the bank.

The minimum monthly average daily balance (ADB) is how much the bank expects you to keep in the account on average for an entire month. The typical calculation for this is your ending balance for everyday of the month divided by the number of days in that month. For example, my ADB for the month of June would be my ending balance for June 1 plus my ending balance for June 2 and so on and so forth until June 30, divided by 30, which is the number of days in June. If I had 1,000 pesos in my bank account on June 1 and made no deposits or withdrawals till June 30, my ADB would be 30,000/30=1,000. That’s a no brainer. Fall below your minimum monthly ADB and the bank will start charging penalties.

Lastly, the minimum amount to earn interest is the required amount of money for the bank to pay you interest earnings. The interest is expressed as a per annum (annual) rate and will be paid on a monthly or quarterly basis, depending on your bank. For example, a deposit account that pays an interest of 1% p.a. will pay 1% of your balance, divided by 12, or 0.083% per month. Twenty percent of this will be deducted as withholding tax on income. For example, if you keep 1,000 pesos in your bank account for this month, your bank will pay you an interest of 0.83 pesos and will deduct 0.17 pesos, leaving you earnings of 0.66 pesos for the month. Hey, at least your money earned something!

Now back to our featured passbook savings product, China Bank Peso Passbook Savings Account allows you to open and maintain an interest-earning savings account for as little as 1,000 pesos! The interest is fixed at 0.75% per annum. (Yes, less than 1%!) As a point of comparison, Banco de Oro’s minimum requirements to open and maintain an interest-earning regular peso passbook savings account is 5,000 pesos, which earns an (even much less) interest of 0.50% per annum. (Yes, still subject to 20% withholding tax!) Wouldn’t you now be trooping to China Bank and open an account today?

Before you do so, by the way, I just want to emphasize that your goal is to save money, not earn interest. So regardless the interest rate, as long as the minimum requirement permits you, go for it! Think of the interest as an icing (and a very small dollop of icing at that) on top of the cake. Focus on the cake because we want to make that cake grow because when that cake grows bigger, that when we start looking for icing. And the bigger the cake, the more room for icing! Enjoy saving!


About Benedict Bernabe

Benedict Bernabe, 27. Benedict has a Master's degree in Development Studies from the University of Melbourne, Australia and a Bachelor of Arts degree in European Languages, cum laude, from the University of the Philippines Diliman. He has worked with the United Nations in the Philippines as the Community Facilitator of the Community of Practice on HIV&AIDS. He worked with Standard & Poor's Capital IQ, a financial information company, as researcher, translator and quality analyst in the investment research team. Prior to this, we worked at IBM Business Services. Benedict is a certified yoga teacher.

8 responses to “Bare Minimum: Here’s A Passbook Savings Account You Can Keep Up With”

  1. ABC says :

    Ben, sayang, should have seen this before I opened a savings account in BDO last month. 🙂 Though I think there’s an upside to the 5k monthly maintaining balance of BDO – I’m forced to leave at least 5k balance whenever I withdraw, otherwise a penalty will be deducted. 😀

    • The Manila Finance Guy says :

      Yes, Aiza, that’s correct! 🙂 If you can open a savings account with a higher maintaining balance, then do so! 🙂 Watch out for more articles, I’m featuring special savings accounts soon 🙂 You might be interested in those, too. Please share this blog with friends! Thanks!

  2. Michael Enriquez says :

    I was surprised that BDO has lowered their interest rates from 0.6250% to .50% I just called their customer service and was advised that this was effective September 1. Can I please suggest to have an article of interest rates comparison for local banks? Thank you. This article is very helpful.

    • The Manila Finance Guy says :

      Hi Michael!

      Thanks for your comment. I will certainly take your suggestion into serious consideration. I’m actually coming up with static pages on the latest deposit, checking, and time deposit interest rates for major Philippine banks. Please watch out for it! I will be back blogging regularly soon!

      The Manila Finance Guy

  3. Ann says :

    I recently opened my first china bank account and they put a mark on my passbook with “cash deposit only”. What does it mean? It’s my first time to have a bank account and I don’t have the slightest idea with it. Can I also withdraw my money even if it’s marked cash deposit only? Please help.

    • Benedict Bernabe says :

      Hi Ann,

      It would probably be best if you ask your branch of account. I hope you’ve done that as it’s been a year since you asked the question. Sorry for the very, very late reply!

      The Manila Finance Guy

  4. ryan says :

    Im a bit confused about the minimum monthly average daily balance. We all know we need to maintain a certain amount of money in order for the bank not to deduct us. But in my situation I happen to lower my balance from the required ADB. But Im going to put some money on it before the month ends so that I can reach my ADB for this month. Will the bank going to charge me at the end of this month even though I have reach the minimum before the month ends?

    • Benedict Bernabe says :

      Hi Ryan,

      I really depends on the bank policy. Some banks would say that if your average daily balance does not go below their minimum requirement at the end of the month, they won’t charge you fees. Some would say that if on any day during the month your balance goes below the minimum balance requirement, they will charge you. I would err on the side of caution and say that the latter would most likely be the case for most banks, therefore make sure that you maintain your minimum balance requirement.

      The Manila Finance Guy

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