Fixed Deposits in Singapore: Complete 2020 Guide

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Best Fixed Deposits in Singapore: Complete 2019 Guide | SingSaver

We give you the lowdown on how fixed deposits work, and round up the best fixed deposit offers in the market right now.

Editor’s Note: Personal loan and bank interest rates are subject to change. Last updated in May 2020.

What is a fixed deposit?

Imagine if you could stash all the ang baos you received through the year, forgot about it for a while, and then found it with some extra cash. Fixed deposits are somewhat like that. It’s a safe, secure, low-risk investment that can help you reap interest over a fixed commitment period. All fixed deposit accounts let you to put your savings away for a set amount of time without touching it. The longer your money is in the bank, the higher the interest rate you get. An easy, surefire way to grow your money.

How does a fixed deposit work? 

Fixed deposit accounts work the same as any other interest-bearing bank deposit account – except that they have a specified maturity date and the funds cannot be withdrawn during the term of maturity.

Generally, the longer the tenure (at least 12 months) and the higher the fixed deposit amount, the higher the interest rate you will earn. Interest payments are generally paid out at quarterly or annual intervals.

Before you open a fixed deposit account, here’s a breakdown of the various types of bank accounts and their key differences. 

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Can I top up a fixed deposit account?

Unlike a savings account that you open with the bank, you may not top up your fixed deposit account. When you open a fixed deposit account, the sum of money you put into the account will stay in that account until the term of maturity.

If you want to put more money into a fixed deposits, what you can do instead is to open another fixed deposit account with the bank with your additional funds. Do keep in mind that the interest rates for the new fixed deposit account could differ based on the bank’s current promotion.

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Can I withdraw my fixed deposit before the tenure is up? 

You can withdraw your fixed deposit before the tenure is up, but you may incur an early withdrawal fee and/or lose the interest income that you have earned.

Banks in Singapore do not charge any fees when the withdrawal is made within 30 days after the opening of the account, but other terms and conditions may apply depending on the bank policies.

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Are fixed deposits taxable in Singapore?

The interest income received from deposits with approved banks or licensed finance companies in Singapore is not taxable. 

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Can foreigners open fixed deposits in Singapore? 

Singaporeans, PRs, and foreigners can all open fixed deposits in Singapore. If you are a Singaporean or PR, you only need your NRIC to open a fixed deposit. If you are a foreigner, you will need:

  • Passport
  • Proof of address
  • Employment Pass/Dependent Pass/S Pass/Student Pass or Long-Term Visit Pass, whichever is applicable. 

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Can I open a fixed deposit using foreign currency?

Yes, most banks actually offer higher interest rates for common foreign currencies like USD dollars, Australian dollar, Euro, British pound sterling, or China renminbi.

Check the fine print for issues relating to conversion fees or auto-renewal clauses, and remember to shop around for the best promotional rate before committing. 

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Why should I open a fixed deposit account? 

Fixed deposit interest rates are generally pretty low, ranging around 1%, unless a bank decides to offer a promotional rate. Here are some situations when opening a fixed deposit account could be an attractive option for you. 

  • You’re sitting on a considerable cash amount which is earning next to nothing (0.05% p.a) in an ordinary savings account.
  • You want a virtually risk-free investment option. Even if something happens to the bank, your deposits and interest earned are still protected (up to $75,000 thanks to the SDIC). 
  • You want regular cash flow. Interest payments are paid out regularly at quarterly or annual intervals. 
  • You need liquidity in your investments. A partial or full withdrawal of fixed deposits can be done at any time so your cash is always liquid. However, be aware you might lose out on any interest to be paid if the money is withdrawn before the fixed deposit reaches full maturity. 

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When’s the best time to open a fixed deposit? 

Unless you’re sitting on a mountain of cash, wait for a sweet promotional deal from the bank before committing. Remember, once your money is in, your money is “stuck” until the fixed deposit matures (unless you don’t mind receiving partial or zero interest upon withdrawal).

As with all financial decisions, be sure to consider your opportunity costs. In the case of fixed deposits, consider that the money could have been invested in higher yield products, or spent on some other form of appreciating asset.

Banks are frequently offering promotional rates which can change monthly, so shop around for best promotion. In general, promotional interest rates range from 1.3% to 2%.

If banks advertise a higher than usual interest rate like 2.5% or more, be sure to read the fine print – it usually applies to fixed deposit sums of $50,000 or more, and usually in the form of “fresh funds” (this means that you cannot transfer funds from a savings or current account within the same bank).  

For example, Citibank advertises attractive interest rates like 3% p.a. for SGD and 3.5% p.a. for USD fixed deposits over a 3-month tenure. But once you look a little closer at the terms and conditions, you’ll learn that these rates are only applicable for minimum deposits of S$50,000 and US$50,000 respectively.

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Fixed deposit vs Singapore Savings Bond (SSB): Which is better? 

Other than fixed deposits, another popular low-risk investment product in Singapore is Singapore Savings Bonds (SSB).

Fixed DepositSingapore Savings Bond (SSB)
Interest rate (Updated May 2020)0.8% – 1.4% p.a
This interest rate stays the same throughout the entire tenure.
0.57% – 1.78% p.a
This interest rate tends to increase the longer you hold your SSB.
Minimum amountS$1,000S$500
Maximum amountNo limitS$200,000
Tenure3 months to 5 years1 to 10 years

There are lots of similarities between the two: they both involve pledging a fixed amount of cash for a fixed amount of time to earn a reliable coupon rate. Both are also considered very low-risk investment products.

However, the maximum value you can invest in SSB is S$200,000, whereas for fixed deposits, you can invest as much as you want – in fact, if you’re planning to place a huge amount in fixed deposits with the bank, you’ll most likely be able to negotiate for a higher-than-advertised coupon rate.

Fixed deposits also usually allow you to withdraw funds immediately (although you may incur certain penalties), while SSB withdrawals are penalty-free and can take up to 30 days.

SSB also tends to have a higher interest rates when you hold your SSB for a longer period of time. However, the first few years generate low interest rates. To get a better idea of the interest rates you will receive for your SSB, you should refer to the average rate per annum.

Besides fixed deposits and SSBs, you can also consider high yield savings accounts to keep your liquid cash. These savings accounts can earn you an interest rate of about 2% p.a on average. However, many of these savings accounts require you to jump through hoops to earn the higher interest rates.

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Pros and Cons of fixed deposits

Pros:

  • Gives guaranteed returns as long as you keep your funds in the account
  • Does not require you to jump through hoops to earn the interest
  • Currently offers higher interest rates than other low-risk options such as Singapore Savings Bond

Cons:

  • Relatively low interest rate when compared to other savings options such as a high yield savings account or investment vehicles
  • Money has to stay in the account for the entire tenure. If you withdraw the money, you risk losing out on any interest earned and might even have to pay a penalty.
  • You cannot make top ups to a fixed deposit account, you can only open a new fixed deposit account for your new funds.

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Best fixed deposit promotions in Singapore for ≤S$10,000

BankTenorPromotional Interest Rate (p.a.)Min. DepositPromo Expiry
DBS/POSB18 months1.30%S$1,000
DBS/POSB12 months1.15%S$1,000
CIMB12 months1.10%
(for online application, not available at branch)
S$10,00031 May 2020
CIMB6 months1.10%
(for online application, not available at branch)
S$10,00031 May 2020
CIMB3 months1.10%
(for online application, not available at branch)
S$10,00031 May 2020
ICBC12 months1.30% (via e-bankingS$500 (fresh funds)28 April 2020
ICBC6 months1.30%S$500 (fresh funds)28 April 2020
ICBC3 months1.30%S$500 (fresh funds)28 April 2020

With the current economic slowdown, DBS is the leader of the pack when it comes to accessible fixed deposits – an initial deposit of just S$1,000 in fresh funds can reap you up to 1.30% p.a. in interest over a 18-month tenure.

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Best fixed deposit promotions in Singapore for >S$10,000

BankTenorPromotional Interest Rate (p.a.)Min. DepositPromo Expiry
DBS/POSB18 months1.30%S$10,000
DBS/POSB12 months1.15%S$10,000
Maybank12 months1.2%S$25,000
Maybank24 months1.4%S$25,000
Hong Leong Finance12 months1.05%S$20,000 (fresh funds)
UOB10 months1.00%S$20,000 (fresh funds)30 May 2020
OCBC12 months0.95%S$20,000 (fresh funds)
Standard Chartered8 months0.80%S$25,000 (fresh funds)31 May 2020

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Best foreign currency (USD) fixed deposit rates in Singapore 2020

BankTenorPromotional Interest Rate (p.a.)CurrencyMin. DepositPromo Expiry
UOB6 months1.30%USD20,000 units (fresh funds)30 May 2020
ICBC3 months1.20%USD500 units (fresh funds)
OCBC3 months0.70%USD5,000 units

Have a spare US$500 lying around? Why not park it in an ICBC fixed deposit account for 6 months and let it earn 2.00% p.a.? Opt for a 12-month tenure and earn 2.05% p.a. (2.10% p.a. if you apply via e-banking).

At a glance, UOB may seem to have the highest interest rate, but only if you have US$20,000 in fresh funds. This goes back to the issue of opportunity cost – could your funds be put to better use on a higher yield investment?

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How does the bank calculate the interest return on a fixed deposit?

The interest rate offered by the bank depends on two factors:
1) the amount of money you are putting into the fixed deposit and
2) the tenure of your fixed deposit.

If you choose to withdraw your funds before the full tenure is up, the interest you receive could be less than the interest rate offered, or none at all. Rest assured that you will still receive your full principal amount.

The calculation of interest returns differs from bank to bank. For example, DBS calculates your interest returns based on the completed quarters of a calendar year. Do check with your bank on the interest return before you withdraw your funds.

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How do I apply for a fixed deposit account? 

You can apply for a fixed deposit with any of the banks in Singapore. Here are the links to banks in Singapore that offer fixed deposits:

Upon application, you will have to transfer your funds into the fixed deposit account to start earning interest on your money.

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Requirements to open a fixed deposit account

If you are an existing user of the bank, you will have to login to your internet banking to open the account. If you do not have an existing account with the bank, you could be required to open an account. This would require documents including:

  • Front and back of your NRIC (for Singaporeans / PRs)
  • Passport and Employment Pass (for foreigners)
  • Proof of residential address

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