The Best Fixed Deposit Accounts in Singapore

Fixed deposit or time deposit accounts are basically investments that earn you interest over a fixed tenure. You don’t need to do anything to earn this interest, just park your money with a bank. Think of it like mold on a piece of bread. Just leave it out in the open and mold will grow – FREE! – on your bread for you.

Seriously, though, fixed deposits are great if you have a substantial amount of money lying around and you don’t want to risk investing them because most investments aren’t principal-protected. That is, in most investments, there is a chance you may get back less than you put in. With fixed deposits, there’s no such risk.

Here are three scenarios, and the banks that give you the best interest rates for each scenario.

Case Study 1: Depositing $10,000 for a year

Because of the relatively low interest rates offered by banks, it really doesn’t make practical sense to open a fixed deposit account of less than $10,000, or to set the money aside for periods of less than a year. We’re not saying that the option to do so isn’t available – just that it won’t give you much returns. Here are the three best banks to deposit $10,000 for a year.

The interest rates offered by these banks are significantly higher than the three major local banks – DBS, OCBC and UOB – all of which offer a 0.25% interest rate.

Currently, CIMB is offering a promotional interest rate of 1.20% per year for a 12-month Fixed Deposit of less than $25,000. That’s $120 you can earn in interest. The promotion ends 31st July.

Case Study 2: Depositing $10,000 for 2 years

As with most fixed deposit accounts in Singapore, the interest rates increase with a longer tenure. Let’s see which are the three best banks to deposit the same amount as Case Study 1, but over 2 years.

Compared to Case Study 1, CIMB replaces Bank of China in 3rd place, but Maybank and RHB still remain in the top 2, with at least 1% interest per year. This is almost twice what the major local banks are offering at 0.55%

Case Study 3: Depositing $25,000 for a year

Some fixed deposit accounts offer better interest rates based on the amount being deposited. With certain banks, these better interest rates start with a minimum of $25,000 so let’s look at how they stack up over a year.

The main difference compared to Case Study 1 is the introduction of the Maybank iSavvy Time Deposit. This special account is operated via internet banking and you get your interest 1 calendar day after you deposit your money. You will also be get interest-on-interest at the end of the tenure. This Time Deposit is compliant with Islamic law.

Currently this case study is eligible for promotional interest rates with three other banks. They are: OCBC Singapore Dollar Time Deposit, which gives 1.50% interest for 12 months (minimum amount of $20,000), UOB Singapore Dollar Fixed Deposit, which gives 1.50% interest for 13 months (minimum amount of $20,000) and CIMB SGD Fixed Deposit, which gives 1.45% interest for 12 months (minimum amount of $25,000). The promotional rates for CIMB and UOB end 31st July. There is currently no end date for the OCBC promotion.

How does this compare to the upcoming Singapore Savings Bonds?

In an earlier article, we compared the Singapore Savings Bonds to fixed deposits. If you don’t include the promotional interest rates, the expected interest rates for the Singapore Savings Bonds are far better than any of the current interest rates offered by banks. Compared to fixed deposits, Singapore Savings Bonds also have higher liquidity. You will not be penalised if you withdraw from the Singapore Savings Bonds.

Of course, unlike the Singapore Savings Bonds, you are able to open a fixed deposit account at any time. Also, there is a cap of $100,000 you can put into Singapore Savings Bonds. There is generally no cap for fixed deposits.

Would you consider parking your money in a fixed deposit account? Why or why not?

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