Citibank step-up interest account

Around month of Oct 2006, Citibank staffs came down to my company to promote their newly launched Step-Up Interest Account. One of the staffs that approached me claimed that I am able to earn interest rate higher than ordinary savings account. But in order to earn a higher interest rate, I have to arrange all my future salaries to be credited into the bank.

As previously every month I credited my salary into POSB and all my transactions have been with POSB since I was young, I was a bit reluctant to switch to Citibank. After giving much of a thought, I decided to switch. Now almost 1 year and 1 month later, I am glad that I have made the decision to switch. After persevering for a year, I manage to earn 12 steps of higher interest rate and now my savings account is on the maximum of 2% interest rate per annum.

This account has disciplined me to save every month because if I fail to save, my base interest rate will be reset to 0.6875% per annum. So at the end of every month I am motivated to keep part of my salary in the savings account as I planned to use the accumulated savings for my new house needs in 3 years time.

However I still do maintain my first savings account with POSB till now which I opened since childhood. I consider my POSB account a temporary savings account as that is the account that holds my whole month pre-budgeted expenditures including all my giro transactions.

At the end of every month a fix part of my salary goes into Citibank while the remaining balance is transferred into POSB. I must say that the particular day at the end of the month, when I transfer my money from Citibank into POSB is one of the happiest moments in my life as I get to see my savings grow and interest compounded monthly in Citibank statement.

Now my worry is with interest rate dropping everywhere and Citigroup suffering billions of losses from sub prime issue in the US, can their Step-Up Interest Account continues to offer me at 2% interest rate per annum? Only time will tell.