Fixed deposit (sometimes called time deposit) accounts are low-risk investments that earn you interest over a fixed commitment period. 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 it. Fixed deposits are an extremely low risk way to grow your money.

Highest fixed deposit interest rates in Singapore (June 2020)

Disclaimer 1: We’ve ignored the crazy-high deposit amounts that banks use to inflate their interest rates because we know how disappointing it is to click on a super attractive advert, only to realise it’s for $1m deposits and up.

Disclaimer 2: Also, some banks have higher interest rates for foreign currencies (RMB, USD usually) but most regular Singaporeans don’t have huge sums of those lying around, so we’ll focus on the SGD ones here.

Disclaimer 3: Many of these promotional rates change monthly. Although some do not have a specified expiry date, and the bank can change the rates anytime.

Fixed deposit board rates are usually very low — under 1 per cent — but every month, many banks come up with fixed deposit promotions to offer better rates.

In “normal”, non-Covid-19 times, these rates can go up to 1.8 per cent to 2 per cent p.a.

However, with the current crisis, June 2020’s promotional rates are much lower from below 1 per cent to 1.3 per cent p.a. range.

It’s a tad overwhelming, so we’ll split this into tiers based on the deposit amount in the following sections.

Best fixed deposit promotions for $10,000 deposit or less

Usually, you’ll need at least $20,000 lying around in order to benefit from the higher promotional interest rates. However, now that the general rates have gone down, suddenly the lower-commitment options are a lot more competitive.

This month, DBS takes the top spot for this tier with a minimum deposit of $1,000 for at least 18 months to unlock the attractive interest rate of 1.30 per cent p.a.

This is still a manageable amount, although you have to commit to a tenure of 18 months.

But if you want to save up during this time, it’s a decent option for those who prefer local banks and trust them not to fold.

ICBC’s rate dropped slightly this month to 1.25 per cent from 1.30 per cent for a tenure of at least six months. That’s still pretty attractive, both in terms of the tenure period and the minimum deposit of $500 required.

That said, if you’re expecting the rates to fall in the coming months, you might want to lock in your money for a longer duration.

The only caveat is you need to apply through ICBC’s internet or mobile banking platforms. If not, the interest rate drops to 1.20 per cent p.a.

Best fixed deposit promotions for $20,000 to $30,000 deposit 

$20,000 to $30,000 is the usual threshold for most fixed deposit promotions. This month, you’d need $25,000 to unlock the highest rate of 1.40 per cent p.a. with Maybank.

For that promotion, the lock-in period is two years and you must apply via their online iSavvy portal.

With $20,000 and above, you have many more banks to choose from. However, other than Maybank, the frontrunners are the same as the above tier (ICBC and DBS).

Personally, we wouldn’t settle for anything below 1.20 per cent p.a.

Normally we’d recommend something at least 1.70 per cent p.a. and above, but given the current climate, anything above 1.20 per cent p.a. is already considered very good.

Best fixed deposit promotions for $50,000 deposit

You’re probably thinking: the more money you can afford lock up, the better the interest rates should be, right?

Normally, this is indeed the case — those with at least $50,000 to mess around usually benefit from the best rates in the market. However, banks simply can’t afford to offer high interest rates at the moment.

As such, even if you have over $50,000 to chuck in a fixed deposit account, it won’t make much difference — not this month anyway. The best rate of 1.4 per cent p.a. is with Maybank, and you only need $25,000 to be eligible for it.

Of course, banks are notoriously fickle about their interest rates, and all these could easily change next month.

For the latest promotional rates, remember to bookmark this page and our MoneySmart fixed deposit comparison page before you commit.

Plus, here’s a quick and dirty summary of what you need to know about fixed deposits.

Fixed deposit vs savings account — what’s the difference?

Once an attractive alternative to that pathetic 0.05 per cent p.a. interest on savings accounts, fixed deposits — like so many ageing Channel 8 starlets — are fading from collective memory.

Today, every bank in Singapore is competing for your dollar with high interest savings accounts, which may actually offer better returns.

Here are the differences between fixed deposits and savings accounts at a glance:

Fixed deposit vs Singapore Savings Bonds — which is better?

In an earlier article, we compared the Singapore Savings Bonds to fixed deposits. There are a few key distinctions between these virtually risk-free investment vehicles.

First, the entry point for Singapore Savings Bonds is much lower than most FDs. The minimum investment is just $500, which is way lower than the $10,000 or $20,000 you’d usually need to secure a decent fixed deposit interest rate.

On the flip side, there’s a cap of $200,000 you can put into Singapore Savings Bonds. There’s no cap for fixed deposits.

Second, fixed deposits are shorter term investments, with the lock-in period usually hovering around 12 months. After the period is over, you should shop around again for another place to park your money.

With SSBs, however, the interest rate climbs every year, so the longer you keep the money in there (up to a maximum of 10 years) the more you get.

At the same time, SSBs have higher liquidity than fixed deposits. You will not be penalised if you withdraw your money at any point.

You do have to pay a $2 transaction fee each time you buy or redeem a bond, though.

As for interest rates — which is obviously the most important point! — there’s been a bit of an “interest rate war” going on in the past year or so.

Right now, fixed deposit interest rates are higher.

The June issue of SSBs offers a measly 0.30 per cent p.a. interest for the first two years, which you can easily beat with a well-chosen fixed deposit promotion that gives you more than 1.0 per cent p.a.

This article was first published in MoneySmart.