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Best Fixed Deposits in Singapore: Complete 2020 Guide

SingSaver team
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.

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other interest-bearing bank deposit account – except that they have a specified maturity date and the funds cannot be withdrawn during the term of maturity.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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What is the Rule of 72?

Rule of 72 is a way to determine how long an investment will take to double itself based on a fixed annual rate of interest. Simply divide 72 by the annual rate of return and you’ll get an estimate of how many years it will take for the initial investment to double.

For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years to grow to $2. This is computed as 72/10 = 7.2.

Similarly, if you invest $10,000 at an annual fixed interest rate of 2% p.a., it will take 72/2 = 36 years for you to double your original investment.

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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 (usually less than 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 in a 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 Deposit Insurance Scheme). 
  • 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. 

Here are also four alternative ways you can use your fixed deposit account smartly.

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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 always offering promotional rates which can change monthly, so shop around for best promotion. In general, promotional interest rates range from 1.7% 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 2.8% p.a. for SGD and 3.8% 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: Which is better? 

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

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 minimal risk investment products.

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

FDs 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 rate (2.17% on average) while FDs have a lower interest rate (1.15% on average). So take note when deciding between the two.

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

Bank Tenor Promotional Interest Rate (p.a.) Min. Deposit Promo Expiry
CIMB 12 months 1.75%
(for online application, not available at branch)
S$10,000 29 February 2020
CIMB 6 months 1.70%
(for online application, not available at branch)
S$10,000 29 February 2020
CIMB 3 months 1.70%
(for online application, not available at branch)
S$10,000 29 February 2020
ICBC 12 months 1.6% (via e-banking)
S$500 (fresh funds)
ICBC 6 months 1.55% S$500 (fresh funds)
ICBC 3 months 1.55% S$500 (fresh funds)

Without a doubt, CIMB is the leader of the pack when it comes to accessible fixed deposits – an initial deposit of just S$10,000 in fresh funds can reap you up to 1.75% p.a. in interest over a 12-month tenure if you apply via e-banking.

That’s an amazing rate of return! On par with most other local banks asking for the same tenure but a much larger initial deposit of at least S$20,000 in fresh funds.

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

Bank Tenor Promotional Interest Rate (p.a.) Min. Deposit Promo Expiry
Maybank 12 months 1.6% S$20,000 (with a minimum S$2,000 deposit into any Maybank Current or Savings account)
Hong Leong Finance 10 months 1.55% S$20,000 (fresh funds)
UOB 10 months 1.55% S$20,000 (fresh funds) 29 February 2020
OCBC 12 months 1.55% S$20,000 (fresh funds)
Standard Chartered 9 months 1.55% S$25,000 (fresh funds) 29 February 2020
Hong Leong Finance 3 months 1.30% S$20,000 (fresh funds)

When placing an SGD fixed deposit with Maybank, do take note that they have a caveat.

Source: Maybank

To enjoy the promotional rate on 12-month SGD fixed deposits, you will need to have made a deposit into selected Maybank Current or Savings Accounts. The applicable accounts include: Passbook Savings, Privilege Plus Savings, SaveUp, or PremierOne Accounts.

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

Bank Tenor Promotional Interest Rate (p.a.) Currency Min. Deposit Promo Expiry
UOB 6 months 1.85% USD 20,000 units (fresh funds) 29 February 2020
ICBC 6 months 2.00% USD 500 units (fresh funds)
OCBC 6 months 1.65% USD 5,000 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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