There are various types of fixed deposit products available in Singapore. Let’s examine a few main types of deposit products and their key features:
Conventional Fixed Deposits
These deposits, also known as Time Deposits, provide higher rates of interest than are available on Savings Accounts. These rates are guaranteed. Deposit tenors can range from between 1 week to 36 months. The longer you hold a deposit, higher the interest rate earnings.
You may choose to withdraw your deposit before the maturity date. The general industry practice is that if your deposit has completed “quarters” (3 months or in multiples of 3 months), you will be paid a lesser interest than originally contracted. And, if you withdraw before 3 months you may receive no interest at all.
You can use your fixed deposit corpus as collateral for credit facilities like Overdrafts. DBS Bank, for instance, offers such credit facilities against your Singapore dollar deposits.
Foreign Currency Deposits
Foreign currency fixed deposits are deposits that are denominated in a currency other than the Singapore Dollar. Many banks in Singapore offer foreign currency deposits in a variety of currencies. These are usually available in tenors ranging from one week to 12 months. Foreign currency deposits provide the potential of earning higher returns than on conventional deposits. They are, however, subject to foreign exchange risk.
Premature withdrawal may result in payment of no interest at all. On top of it, you may be charged a penalty fee. Thus, you could receive lesser than the amount you originally invested. And, if foreign currency movements are not in your favour, this amount may go down further.
Islamic Fixed Deposits
Islamic fixed deposits are also available in Singapore. These deposits conform to Shariah principles.One example is the Singapore Dollar Term Deposit-i from Maybank. This deposit product is based on the Shariah priniciple of Murabaha, involving sale of commodities at a marked-up price between Maybank and you. Profits are determined upfront and will be paid one calendar day after cash placement or cheque clearance. Customers who are 55 years of age and above can enjoy 0.25% above prevailing profit rates.
Some banks have deposit products that offer a variety of automatic renewal options upon the deposit reaching maturity date. These are:
- Renewing the principal together with the interest
- Withdrawing the interest and renewing the principal
- Withdrawing both the principal and interest (they will generally be credited to your current or savings account)
Deposit Insurance Scheme
Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law.
Monies and deposits denominated in Singapore dollars under the CPF Investment Scheme and CPF Minimum Sum Scheme are aggregated and separately insured up to S$50,000 for each depositor per Scheme member.
Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.