Today there are various forms of investment offered by banks and financial institutions.
But rarely do people talk about fixed deposits. It’s a form of investment that is low risk in nature.
Fixed deposit is the type of investment that guarantees the total return of your capital after a specific period, with interest.
Well, at least it’s insured for up to $75,000 under the SDIC.
However, it will not accrue huge profit, unlike other forms of investment.
But if you are a first-time investor and have inhibitions about risking away your hard-earned money, a fixed deposit might be for you.
Through this article, we will help you get acquainted with fixed deposits and in sorting out the best fixed deposit accounts for you.
What is a Fixed Deposit?
A fixed deposit, also called a time deposit, is one of the safest forms of investment.
Here is an example to understand how a fixed deposit works: Let’s say you have $10,000 to spare and open a fixed deposit account with XYZ bank. The bank offers an interest rate of 0.75% p.a. for 24 months.
So, the estimated amount you will get after reaching the maturity period is $10,150. You earned an extra amount of $150 at an interest rate of 0.75%.
You can also use this fixed deposit interest calculator to estimate the amount you will earn for a specific interest rate.
In a fixed deposit, you need to take a look at 3 vital factors:
- Deposit period
The first factor is the deposit period or tenure. The tenure period can last for days, months, or years. The longer the tenure, the higher the return rate.
Many people think that you can’t withdraw your money if you put it in a fixed deposit. It is possible do so. But the bank will levy some charges due to the untimely withdrawal of the amount. Hence it would be best to have spare cash for other expenses before you fixed deposit the amount.
- Interest rate
The second factor is the rate of interest. It is an essential factor that determines the amount you will get after the deposit period. Various banks offer different interest rates for you to choose from.
- Placement amount
The amount you like to deposit in a fixed deposit is known as the placement amount or deposit amount. It is an essential factor, as the amount you deposit is the principal where you will earn interest from it. With a larger deposit, you will get better interest rates and returns.
Promotional rates are rates that are offered by banks to a particular amount for a specified period of time.
Its validity may last for a month or longer, depending on the bank.
Compared to board rates, promotion rates generally have better interest rates and tenures.
If you want a good deal, you should check out what the banks are currently offering.
In some banks, the board rate is better. A bank’s board rates are the interest rates, tenures, and minimum deposits it sets. The rates may change, unlike promotion rates.
Therefore, it is advisable to have a thorough comparison and analysis before you invest your hard-earned money.
Advantages of Fixed Deposit Accounts
It’s unavoidable to feel uncertain and anxious as a beginner investor, no matter what type of investment you’re making. Fixed deposits, on the other hand, are secure investments.
It may not provide high returns, but it provides security. The following are some of the advantages of opening a fixed deposit account:
- You can choose the deposit period of a fixed deposit, whether it’s for a month or for more than a year.
- The low-risk factor is one of the important aspects and merits of fixed deposits. Unlike other forms of investment, your money is safe and secure with the bank.
- Your interest rates are guaranteed as you agree upon them before opening an account. You will receive your money in total amount along with interest when it reaches maturity. This means this is a good choice if you absolutely cannot lose the money that you’re saving for.
- In addition, tax stress can be eliminated. You are not taxed on the interest you received from your fixed deposit if it is obtained through a registered financial institution or an approved bank in Singapore.
Disadvantages of Fixed Deposit Accounts
- Interest rates are low. This is the setback to having little to no risks involved in opening a fixed deposit account. Most of the time, you will be earning interest rates lower than 1% – a rate that barely fights inflation.
- As there are minimum deposit tenures, liquidity is an obvious issue. If you’re looking to withdraw your money before the tenure ends, banks levy a fee for untimely withdrawals. In Singapore, the banks do not levy fees on withdrawals made within thirty days of opening an account.
Overview of the Best Fixed Deposit Rate in Singapore
Here are some of the best interest rates for fixed deposits in the range of $50,000 and below:
In light of the current economic slowdown, fixed deposit interest rates are lower than normal.
The following are some of the top banks in Singapore with better fixed deposit accounts:
1. CIMB Bank
Minimum placement amount: $5000 for up to 2 months
$1000 for 3 months or more
Tenures available: 1, 2, 3, 6, 9, 12, 24 months
CIMB, also known as Commerce International Merchant Bankers, is a universal Malaysian-based bank headquartered in Kuala Lumpur. Despite being a Malaysian bank, Singapore is one of their core markets alongside Indonesia and Thailand.
When it comes to promotional rates, CIMB offers the best fixed deposit rate. For short or long tenure of any amount, it provides the best option in the market.
With a minimum deposit of $5,000, you get an interest rate of 0.20% for a month and 0.25% for 2 months of tenure.
The bank is currently giving promotional rates for fixed deposits. It is valid from 1 April 2021 till 30 April 2021. But the minimum placement amount required is $10,000. For a higher rate of interest, you can lock it for two years.
You can check the table below:
To know about CIMB’s fixed deposits, click this link.
If you like to make a fixed deposit for 12 to 18 months, you can consider going for Hong Leong Finance.
Minimum placement amount: $ 500 for 3-month to 36 months
$10,000 for 1 month to 2 months
$100,000 for one week
Tenures available: 1, 2, 3, 4, 6, 8, 9, 10, 12, 13, 15, 18, 24, 36 months
Hong Leong Finance is a finance company based in Singapore. The company has transcended from a Small and Medium Enterprise (SME) to one of the largest banks in the country. It ranks among the Top 1000 worlds bank and Top 100 ASEAN banks by The Banker.
For a medium-length period, Hong Leong Finance offers exciting promotional fixed deposit rates. Suppose you want to invest for 2 months or longer; you can do so with a minimum deposit of $500.
For 12 months tenure or more, it offers excellent interest rates despite the economic slowdown. The bank also doesn’t charge a penalty for premature withdrawal for 3 months of tenure.
You can check the board interest rates (% per annum), tenure by deposit size of Hong Leong Finance:
Also, note that these are only board rates. Promotional rates are not displayed.
Currently, there is a promotional rate for the following tenure. It is valid till 31 July 2021.
Check the table below:
The minimum deposit amount required is $20,000 or more. To further understand the process and procedure, follow this link.
If you want to make a small deposit for a long or medium tenure, DBS offers reasonable interest rates.
Minimum placement amount: $1,000 for up to 36 months
Tenures available: 1 month – 60 months
The bank has a credit rating of AA- and Aa1, which is the highest in the Asia Pacific region. It was also awarded the “Safest Bank in Asia” consecutively from 2009 to 2015 by Global Finance.
Unlike other banks, DBS doesn’t usually provide a promotional offer. However, the fixed deposit rate for a long tenure is higher than other banks.
The bank offers a fixed deposit interest rate of 1.3% p.a., which is very high given the economic situation. But it is applicable only for those who have a fixed deposit account with DBS and is due for renewal.
If you plan to open a fixed deposit account, you can deposit a minimum of $1,000. The interest rate is 0.6% p.a. for a tenure of 8 months.
Also, the eligibility age is 12 years and above. So, if you have money to spare, then you can open a fixed deposit account for your child. With a minimum amount and long tenure, you will get a favourable return for the amount of risk you take.
You can click on this link to see the detailed rates and deposit amount for various tenures.
If you are looking for a long tenure fixed deposit and are acquainted with online banking, you can opt for Maybank.
Minimum placement amount: $5,000 for 3 months and 6 months
$25,000 for 12, 24, and 36 months
Tenures available: 3, 6, 12, 24, 36 months
Maybank is one of the largest banks in Southeast Asia. In 2020, the Brand Finance Report stated Maybank as Malaysia’s most valuable bank brand.
Today it is among the leading banking groups in Asia and ranks 4th in the largest banks of Southeast Asia. One of Maybank’s largest overseas operations is in Singapore.
Maybank offers accessible high board rates for long tenures. Although it presently doesn’t offer any promotional rates, there are reasonable board rates to look into.
You can also earn a greater interest rate if you are an existing customer with the bank, given you are okay with online banking. Through Maybank iSAVvy, your long-term fixed deposit will fetch slightly higher returns.
Say you made a minimum deposit of $25,000. The interest rate you will get is 0.65% for 24 months. The interest you will accrue per year is roughly $162.50.
Although existing customers have more benefits, the fixed deposit rate is reasonable even for the first-time investor. For a minimum amount of $1,000, you can get a fixed deposit of 0.4% for 18 months.
Here is a list of how much you can earn through Maybank iSAVvy interest rate by selecting tenure and deposit sizes:
Also, note that the above amounts are calculated using board rates.
If you are looking for a long tenure for a moderate deposit amount, you can opt for UOB.
Minimum placement amount: $5,000
Tenures available: 1 to 36 months
UOB, also known as United overseas Bank, is a multinational banking organisation based in Singapore. It was established in the year 1935 and was earlier known as United Chinese Bank (UCB).
It is one of the prominent banks in Southeast Asia. The bank has 68 branches in Singapore. It has over 500 offices in 19 countries spanning over Asia Pacific, Western Europe, and North America.
When you’re a first-time investor and like to start with a moderate amount ($50,000 or less), UOB has some of the best offers for this. It also comes with an excellent promotional rate.
Currently, UOB is offering an interest rate of 0.45% p.a. on a fixed deposit of 10 months. To further understand the process and eligibility, click this link.
What is commendable about this promotion is its 10-month tenure. Most banks only offer promotions for a term of 3, 6, 9, or 12 months.
Also, the account is highly competitive for a long tenure with small to moderate deposits. If you open a fixed deposit account for a 14 to 24-month tenure, you will earn an interest of 0.20%. None of the banks offers higher rates for a deposit less than $50,000 or less.
You should also note that UOB will renew the account automatically at the current promotional offer. Therefore, if you have a fixed deposit with the bank that is about to mature, it will auto-renew your account. So, check with the bank and update your account if needed.
If you are looking for a specific tenure, you can opt for this bank.
Minimum placement amount: $5,000
Tenures available: 1 month- 48 months
OCBC (Oversea-Chinese Banking Corporation) is a Singapore-based multinational banking group and financial services corporation.
Today OCBC is the 2nd largest bank in Southeast Asia, and it is one of the world’s highly regarded banks. The Global Finance Magazine consistently ranks OCBC among the top 5 safest banks in the world.
What is unique about OCBC is you can set a specific tenure for your fixed deposit account. Usually, the typical tenures are 3, 6, 9, or 12 months, but here the banks allow you to set your tenure by the month. The placement amount required to open a fixed deposit account is $5,000.
OCBC also offers attractive promotional rates. The bank currently offers an interest rate of 0.35% p.a. on a fixed deposit for 12 months. The minimum amount required to obtain this promotional rate is $20,000.
It also offers promotional rates in USD at an interest rate of 0.10% and 0.15% p.a. The tenures are 3 and 6 months, respectively, with a minimum deposit of $5,000.
Click this link to see the eligibility and to understand the process further.
If you’re looking for an excellent promotional rate for a small deposit amount, you can opt for ICBC.
Minimum placement amount: $500
Tenures available: 1, 3, 6, 9, 12, 13, 24 months
Industrial and Commercial Bank of China (ICBC) is a multinational banking state-owned bank from China. It came into the establishment as a Limited company in the year 1st January 1984.
The bank has consistently topped the largest bank in the world in 2017 and 2018. It has received many reputable accolades. The Financial Stability Board considers ICBC as a systematically important bank.
In ICBC, you can open a fixed deposit account with an amount as little as $500. Most banks don’t have offers in this type of account. But here, you can get access to board rates and promotional offers with a minimum amount of $500.
Suppose you are a first-time investor, this is an excellent opportunity to open a fixed deposit account with ICBC. The minimum amount required is $10,000 or $20,000 to get access to promotional offers in most banks.
Currently, the bank’s promotion offers a fixed deposit rate at 0.60% p.a. for a tenure of 12 months through e-banking. The minimum amount must be at least $500 and in fresh funds. It means you cannot transfer money from a current or savings account within the same bank.
If you cannot do it through e-banking, there is an option for over-the-counter deposits, but the rates will be lower. You will get a fixed deposit rate of 0.05% as opposed to transactions done through e-banking.
Therefore, it is recommendable to make a fixed deposit via e-banking to get more benefits.
The bank also offers promotional rates for tenures of 1, 3, 6, and 9 months. It provides flexible promotion rates regardless of the deposit amount.
Fixed deposits are an excellent way to protect your money and grow your wealth without feeling anxious. With ample options offered by the banks, you can choose the one that is best for you.
It has a greater scope than most other types of investment can’t offer – a highly safe investment option.
With a few limitations, opening a fixed deposit account is an excellent way to protect your money. You can sleep peacefully at night knowing that your money is safe and growing steadily.
You should also note that banks often change their interest rates and offer. Therefore, it would be best to check the bank’s websites timely to get updated information.
We hope that this article has cleared your doubts about fixed deposits. Hopefully, you choose the right bank that suits your requirements.
If you’re unsure if fixed deposits are for you, talk to a financial advisor so that you don’t make the wrong decisions.