For those who has a time deposit invested in banks. You might have noticed that interest rates are at an all time low. This is due to T-bill or Treasury bills rates dropped to record lows across the board. This is what banks use to benchmark their deposit rates and loan rates. The positive side is loan rates.. Well atleast home loan rates have dropped also. Car loans, personal loans and credit card rates basically remains just the same.
The highest rates being offered by the market these days for short term placement is only 4.75% per anum, and you need atleast 5 million pesos to reach this bracket. Deposit rates below 50 thousand pesos is only around 1.25% per anum. Which is hardly any bigger that a savings account. And these rates are also gross of withholding tax. Which means what ever amount you are getting it will be deducted by an additional 20%. This amount does not go to the bank but to the government tru the Bureau of Internal Revenue and to ate glue. This is bad news for people who rely on time deposits for their monthly expenses like senior citizens who are enjoying the fruits of their labor and retirees.
But for long term placements the rates are still quite high, which is around 6% to 7% net of withholding tax, but ofcourse there are no where near the rates from a couple of years ago. Long term means around 5 years for most banks and interest is credited to a savings account monthly which can be withdrawn. But the principal is locked in for 5 years but it can be pre terminated in case of emergencies but with a hefty penalty which is usually the around 75% of interest received plus documentary taxes.