What is a Fixed Deposit?

Key highlights

• FDs give higher interest rates than regular savings accounts, with some banks in Singapore offering up to 2.90%.

• FDs are protected by the Singapore Deposit Insurance Corporation (SDIC) up to S$100,000 per depositor per bank. 

• FDs in Singapore come with various tenure options, typically ranging from one month to several years, allowing you to match your investment with your financial goals.

• Most banks ask for a minimum deposit amount to open an FD, which can vary between banks.

Fixed deposits: Singapore's alternative to CDs

FDs in Singapore serve a function similar to Certificates of Deposit (CDs), providing investors with a secure means to grow their savings over a predetermined period at fixed interest rates.

Both FDs and CDs offer guaranteed returns, with interest rates influenced by the deposit tenure and prevailing market conditions. Singaporean banks frequently enhance the attractiveness of FDs by offering promotional rates significantly higher than standard savings account's interest rates. 

For instance, Maybank in Singapore provides rates up to 2.90% per annum for a 6-month FD with a minimum deposit of S$20,000.

Fixed deposits vs. savings accounts

In Singapore, both savings accounts and FDs are commonly used for saving money, but they serve different financial purposes:

• Purpose: Savings accounts are typically used for daily transactions and short-term savings, offering easy access to funds. In contrast, FDs are suitable for medium to long-term savings goals, as they require depositing a fixed sum for a specified tenure, during which the funds are not accessible. 

• Interest Rates: Savings accounts offer nominal interest rates. FDs usually provide higher interest rates, which are directly proportional to the duration of the deposit; longer tenures often yield better rates. 

• Accessibility: Savings accounts offer flexible access to funds, allowing withdrawals and deposits at any time without penalties. FDs, however, lock in your funds for a predetermined period, and early withdrawal typically incurs penalties, making them less liquid than savings accounts. 

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Why are they called fixed deposits in Singapore?

FDs are so named because they involve depositing a sum of money for a predetermined period, during which the interest rate remains unchanged. This “fixed” nature ensures that the returns are stable and not subject to market fluctuations, providing investors in Singapore with a secure and predictable investment option. 

>> MORE: What are fixed income investments?

In Singapore, FDs are primarily referred to by this name. However, some banks use alternative terms, such as “Time Deposit”, to describe similar fixed-term deposit products. For example, OCBC Bank offers a “Time Deposit” account, which functions similarly to a fixed deposit, allowing customers to earn higher interest rates by locking in their funds for a specified tenure. 

How do fixed deposits work?

Fixed Deposits work by allowing you to lock in a specific amount of money for a predetermined period at a fixed interest rate, with interest paid upon maturity or according to the chosen payout option. Here are the details about how they work:

• Banks and promotional FD rates: Fixed deposits in Singapore are offered by various banks, each providing competitive interest rates, often enhanced through promotional offers. For instance, as of March 2025, CIMB Bank offers promotional rates up to 2.45% per annum for a 3-month fixed deposit placement.

• Tenure options: FDs in Singapore offer a range of tenures, typically starting from 1 month, with options extending up to several years. Longer tenures often come with higher interest rates. 

• Minimum deposit requirements: The minimum deposit varies by bank, generally ranging from S$500 to S$20,000. For instance, ICBC requires a minimum deposit of S$500 for FD via E-banking.

• Interest rate payout: Interest is typically paid upon maturity of the FD. Some banks may offer monthly payouts or allow interest to be compounded, leading to compound earnings over the term of the deposit. For example, OCBC Bank allows early withdrawal of Time Deposits via their digital app, though an early withdrawal fee may apply, and interest earned may be reduced or forfeited.

• Maturity and renewal options: Upon maturity, FDs can be renewed automatically at prevailing rates, with options to modify the deposit amount or tenure. It's essential to inform the bank of any changes before maturity to avoid automatic renewal under existing terms. 

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