Fixed deposit is a bank deposit that provides a specified interest rate, usually higher than a savings account to the depositor upon maturity. A certificate will be issued with a specified term starting from the period of a minimum of 30 days to the maximum of five years. The bank is authorised to ask depositors to give 30 days’ prior notice for an early withdrawal of amount from such an account. However, such cases would involve penalties for an early withdrawal.
Depositors can withdraw the funds without any penalty upon maturity. Depositors will be entitled to renew and hold the fixed deposit for another term of his/her choice. As a general rule, the longer the term is, the higher the rate of interest that the depositor will enjoy.
Some banks may offer time periods starting from one month up to sixty months. The term range depends upon each bank individually. A time deposit account usually requires a minimum deposit of S$1,000 to open, but the rate of return may vary based upon the range of period.
The bank guarantees to pay a fixed interest rate to the depositor for the duration that the amount is kept with the bank. Therefore, when the fixed deposit (FD) matures, the depositor will get back the initial deposit amount along with the interest earned.
Singaporeans, PRs or foreigners may open an FD account. Some banks require you to be at least 12 years old and some require you to be older than 12 years old.
Banks revise their fixed deposit interest rates from time to time. So, keep an eye for the current and latest interest rates from all banks.
Minimum deposit is $1,000. But certain banks require you to deposit at least S$5,000.
NRIC for Singaporean or PR. While for foreigners, your passport and an Employment Pass, S-Pass or Student Pass. You may need to provide a bank statement, phone bill or CPF contribution history statement to prove your residential address.
Commonly, you have the choice to choose for a 1-month fixed deposit tenure. Some banks offer shorter tenures if you’re planning to deposit large amount.
You don’t need to pay any additional fees. However, there may be fees for premature termination of the account.
Your FD will earn you a higher rate of interest than a usual saving account If you opt for a foreign currency fixed deposit then it offers you a simple way to invest in the currency of your choice
These deposits are affordable, you can start with a minimum amount of S$1,000 Upon maturity, the fixed deposit will be automatically renewed for another period at the prevailing interest rate unless you change it via prior instructions
In certain cases, your S$ Fixed Deposit can serve as a collateral and allows you to apply for an overdraft facility at an affordable and competitive rate
Investing in Fixed Deposit will definitely offer a guaranteed return. Besides that, it is very liquid as one can withdrew the money whenever one wants cash for urgent purposes. Though premature withdrawal will result in slight loss of interest income but it is better than selling stocks as you can instantly receive your cash. Fixed deposit is flexible because one can opt for fixed deposit with maturity for 1 month or 1 year or even 5 year.
There will be a loss of liquidity because the money is committed for the duration. The money that you invest in the time deposit is vulnerable to currency fluctuations too. You will have no flexibility to access your funds as your money is locked away with the bank. Even though FD ensure you protection against uncertainty, it offers poor protection against inflation. Majority may claim that investing it in other instruments like stocks or bond will yield you higher returns.
You can rely on iMoney Fixed Deposit Calculator to obtain a comparative analysis of the FD interest rates offered by various banks in Singapore. You can review the individual interest rates based upon the time range offered by each bank. This comparison allows you to make a wise decision that suits your pocket and fulfils your saving needs. The application process with iMoney is simple and quick, and most importantly this service is free!
Read the latest news and updates on Fixed Deposit in Singapore here.