What Is a Fixed Deposit Account and How Does It Work in Singapore?
If your savings are sitting in a standard savings account earning very little interest, you are not alone. Many Singaporeans keep more cash than they need in low-interest accounts, not because they prefer it that way, but because the alternatives feel unfamiliar or unclear. A fixed deposit account is one of the more straightforward options available: you commit a lump sum for a set period, earn a guaranteed rate, and collect your principal plus interest when the term ends.
What Is a Fixed Deposit Account?
A fixed deposit account is a product offered by licensed banks and finance companies where you place a lump sum for a fixed period, known as the tenor, in exchange for a predetermined interest rate. That rate is agreed at placement and does not change for the duration of the term.
Three characteristics define a fixed deposit:
- Your capital is protected. You receive your full principal back at maturity.
- Your returns are fixed. The interest rate is locked in at placement, regardless of what happens to market rates during the tenor.
- Your money is not meant to be accessed before maturity. The structure is designed for funds you are comfortable setting aside for the full term.
In Singapore, fixed deposits placed with full banks and finance companies, except those exempted by the Monetary Authority of Singapore (MAS) are protected under the Singapore Deposit Insurance Corporation (SDIC) for up to S$100,000 in aggregate per depositor per Scheme member by law, making them one of the lower-risk ways to earn a return on cash you will not need in the near term.
How Does a Fixed Deposit Work?
When you open a fixed deposit, you choose the principal amount and the tenor. The interest rate is confirmed when you first open the deposit (otherwise known as “at placement”) and stays fixed for the entire term. In Singapore, tenors typically range from 1 month to 36 months, depending on the institution, giving you flexibility to match the lock-in period to your actual cashflow needs.
Interest is usually paid out at maturity, meaning you receive your original principal plus the interest accrued over the full tenor in a single payment when the term ends. Some institutions offer monthly interest payouts for longer tenors, which may suit savers who prefer a more regular income stream from their deposits, rather than as a lump sum at the end.
Here is how the figures work across a few scenarios:
| Principal | Tenor | Interest Rate | Interest Earned | Total at Maturity |
| S$10,000 | 6 months | 1.25% p.a. | S$62.50 | S$10,062.50 |
| S$20,000 | 12 months | 1.30% p.a. | S$260.00 | S$20,260.00 |
| S$50,000 | 24 months | 1.35% p.a. | S$1,350.00 | S$51,350.00 |
The figures above use SingFinance’s maximum advertised rate of 1.35% p.a. for illustrative purposes. Actual rates vary by tenor and are subject to change; prevailing T&Cs apply.
What Happens When Your Fixed Deposit Matures?
At the end of your tenor, you generally have three options: withdraw your principal and interest in full, renew your deposit at the prevailing rate for a new term, or allow it to roll over automatically if you set an auto-renewal instruction at placement.
If you choose to renew, it is worth reviewing the current rate before you commit. The rate on offer at rollover may differ significantly from what you locked in originally, particularly when market interest rates have shifted during your term. Unless you actively place a new deposit, auto-renewals are typically processed at the prevailing board rate, which may differ from the promotional rate you originally received.
Thinking of withdrawing your money before the term ends? Most institutions allow you to break a fixed deposit before maturity, but the cost is real. You will typically forfeit some or all of the interest you would have earned, and some institutions may charge an additional penalty fee. Choosing a tenor that genuinely matches your liquidity needs at the point of placement is the cleaner way to avoid this.
How Does a Fixed Deposit Differ from a Savings Account?
The difference between a fixed deposit and a savings account comes down to two things: liquidity and rate certainty.
A savings account is liquid. You can deposit and withdraw at any time, and the institution can adjust the interest rate it pays whenever market conditions change. That flexibility is useful for funds you may need on short notice, but it also means your returns are variable and not guaranteed.
A fixed deposit works in the opposite direction. You commit a sum for a defined period, and in exchange, the institution commits to a rate for that same period. You give up free access to your funds and gain certainty on your return.
| Fixed Deposit | Savings Account | |
| Access to funds | Locked for the tenor | Withdraw anytime |
| Interest rate | Fixed at placement | Variable, set by institution |
| Return certainty | Guaranteed for the term | Not guaranteed |
| Best suited for | Funds you won’t need immediately | Day-to-day and accessible savings |
Who Is a Fixed Deposit Best Suited For?
A fixed deposit suits savers who prioritise capital protection and predictable returns over the potential for higher but variable returns. Retirees managing a lump sum, savers working toward a specific goal with a defined timeline, and anyone with idle cash sitting in a standard account earning very little are all natural candidates.
It also works well as a complement to a liquid emergency fund. A sensible approach is to keep three to six months of expenses in an account you can access at any time, and place the portion of your savings beyond that into a fixed deposit. You typically earn a better rate on the money you will not need immediately, while the funds you might need in a hurry stay within reach.
Singapore SMEs with surplus business cash follow similar logic. Placing idle funds in a fixed deposit for a defined period earns a predictable return without taking on market risk, and puts working capital to better use than leaving it in a current or low-interest business account.
Opening a Fixed Deposit Account in Singapore
SingFinance’s Fixed Deposit1 is a straightforward option for savers who want a guaranteed rate on money they can set aside for a defined period. Key features include:
- Minimum placement of S$1,000
- Tenures from 1 to 24 months
- Competitive interest rates up to 1.35% p.a.2
- Available to open online or in person at any of our four branches
To open a fixed deposit account with SingFinance, the process is as follows:
- Decide on the amount you want to place (minimum S$1,000) and the tenor that suits your plans.
- Visit singfinance.com.sg to apply online, or head to your nearest SingFinance branch to do it in person.
- Complete the application with your personal and deposit details.
- Fund your placement via FAST, PayNow, or over the counter at a branch.
- Receive confirmation of your placement, including your locked-in rate and maturity date.
If you are ready to put your idle savings to work, you can get started with a high-interest fixed deposit account online in a few minutes.
1Singapore Dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$100,000 in aggregate per depositor per Scheme member by law.
Sing Investments & Finance Ltd is a member of the Deposit Insurance Scheme.
2Rates are indicative, subject to change, and prevailing T&Cs apply.