Fixed Deposit

What is a fixed deposit?

Fixed deposit (FD) is a type of short-term investment where an investor deposits a certain amount of money and agrees to refrain from withdrawing their cash for a set length of time. Upon maturity, investors will be paid a great interest rate, which is usually more significant than a conventional savings account. New investors prefer it because it is insured by the government and ensures high returns, depending on the interest rates and the tenure.

Why should I choose fixed deposits?

Among other reasons, you should choose fixed deposit because:

  • Insured by the government
  • Return is guaranteed
  • It protects against inflation loss
  • Interest is greater than a conventional savings account
  • Easy withdrawal

What should I know before applying for fixed deposits?

  • Interest rates

    You should know the interest rates upon maturity to ensure you gain a great amount of return. Interest rates differ from bank to bank and tenure to tenure.

  • Tenure

    Different banks offer different tenures, ranging from 1 month to a few years. Choose the one that suits your needs and financial goals.

  • Hidden fees

    It is crucial to identify all costs incurred to avoid spending more than expected.

  • Penalty

    You should be informed of the penalty amount to know what to expect if you need to withdraw the money before maturity.

  • Banks

    Being aware of the customer service and the reputation of the bank you are planning to apply your fixed deposit account is an important step! Do thorough research before deciding on a bank.

What are the types of fixed deposits available?

There are 2 types of fixed deposits available:

  • Cumulative

    Interest is payable upon maturity and is compounded annually.

  • Non-cumulative

    Interest is payable according to your preference (monthly/ quarterly/ annually).

Who can apply for a fixed deposit?

You are eligible to apply for a fixed deposit if you are above 18 years old. Luckily, certain banks allow individuals below 18 years old to apply for a fixed deposit. Refer to your preferred banks.

What are the documents required to apply for a fixed deposit?

Generally, your identification card is the only document needed to apply for a fixed deposit, but different banks have different requirements. Refer to your preferred banks.

What is the tenure of a fixed deposit?

1 to 60 months. You are free to choose the length depending on your needs and financial goals.

What is the minimum amount to deposit into a fixed deposit?

For a tenure of 1 month, most banks would require you to deposit at least RM5,000. If you plan to lock your money for 2 months and above, a minimum of *RM500 or RM1,000 is required. Additionally, please take note that for a non-cumulative fixed deposit, RM5,000 is the minimum amount.

*Depending on the terms of the bank

What are the interest rates for a fixed deposit?

Interest rates depend on the bank you chose and the tenure. In general, they range from **1.1% – 2.1% p.a. But you should also know that some banks are willing to negotiate the interest rate if you lock your money for more than 24 months.

**As of 25 March 2022

What happens if I withdraw my money before maturity?

There are 3 scenarios of withdrawal:

  • Withdrawal within 3 months of account opening

    No interest will be paid to you

  • Withdrawal after 3 months of account opening

    50% interest of the completed months will be paid to you

  • Partial withdrawal

    Only some banks allow this and, in most cases, withdrawal of multiples of RM1,000 is allowed. Refer to your preferred banks.

What banks are offering fixed deposits?

  • Alliance Bank
  • AmBank
  • BSN
  • CIMB
  • Citibank
  • Hong Leong Bank
  • HSBC
  • Maybank
  • OCBC
  • Public Bank
  • RHB
  • Standard Chartered Bank
  • UOB

What are the common terms for fixed deposit?

  • “p.a.”

    It stands for per annum or each year.

  • “Interest rate”

    The amount of return earned by depositors.

  • “Tenure”

    The amount of time the money is locked in a fixed deposit account.

  • “Deposit”

    The amount of money locked in a fixed deposit account to earn interest.

  • “Penalty”

    The additional charge from the bank for withdrawals before maturity (or premature withdrawal).

  • “Maturity”

    The end of a set time when an investment becomes due, and the principal and interest are repaid.

  • “Premature withdrawal”

    The money withdrawal in a fixed deposit account before maturity.

  • “Partial withdrawal”

    The withdrawal of part of the amount in a fixed deposit account before maturity.