Fixed Deposit

A fixed deposit (FD) account is a type of investment scheme offered by banks to help you manage your savings. This financial service provides you with a fixed rate of interest on your funds. The funds saved in the form of fixed deposit can be received at the time of maturity with a profit or interested calculated on an annual basis. Most banks in Malaysia offer long term fixed deposits with a maximum tenure of 5 years.

Why choose a Fixed Deposit?

  • It is a risk-free and safe investment option.
  • It comes with a relatively higher interest rate as compared to regular savings accounts and gives you guaranteed returns.
  • The fixed deposits are flexible in terms of tenure and amount you need to invest.
  • Your deposit amount is protected under PIDM for up to RM250,000.

Banks offering Best Fixed Deposit Rates in Malaysia

The following table contains the list of banks and financial institutions that offer fd in Malaysia with interest rates associated with each of them:

Bank/Financial institution Name Tenures available Interest/Profit Rates
Affin Bank Up to 60 months Conventional: 3.25% to 4.05% p.a.
Islamic: 3.25% to 4.05% p.a.
Alliance Bank Up to 60 months Conventional: 3.20% to 3.35% p.a. for up to 24 months (For FDs with tenures more than 24 months, the rate is negotiable).
Islamic: 2.95% to 3.10% p.a.
AmBank Up to 60 months Conventional: 3.15% to 3.40% p.a.
Islamic: 3.15% to 3.50% p.a.
Bank Islam Up to 60 months 3.30% to 4.10% p.a.
Bank Muamalat Up to 60 months 3.30% to 4.00% p.a.
Bank Rakyat Up to 60 months and more 3.40% to 4.45% p.a.
BSN Up to 60 months 3.20% to 3.60% p.a.
CIMB Up to 60 months Conventional: 3.20% to 3.65% p.a.
Islamic: 3.20% to 3.65% p.a.
Citibank Up to 60 months 2.90% to 2.95% p.a.
Hong Leong Up to 60 months Conventional: 3.00% to 3.25% p.a.
Islamic: 3.00% to 3.25% p.a.
HSBC Bank Up to 60 months Conventional: 2.90% to 4.15% p.a.
Islamic: 2.90% to 4.15% p.a.
Kuwait Finance House Up to 12 months 3.00% to 3.30% p.a.
Mach by Hong Leong Up to 24 months 3.00% to 3.20% p.a.
Maybank Up to 60 months Conventional: 3.15% to 3.60% p.a.
Islamic: 3.15% to 3.60% p.a.
MBSB Up to 60 months 3.10% to 4.20% p.a.
OCBC Up to 60 months Conventional: 2.90% to 3.35% p.a.
Islamic: 2.90% to 3.35% p.a.
Public Bank Up to 60 months Conventional: 3.20% to 3.45% p.a.
Islamic: 3.20% to 3.35% p.a. for up to 12 months (For FDs with tenures more than 12 months, the rate is negotiable).
RHB Up to 60 months Starting from 3.20% p.a. to 3.35% p.a. for up to 12 months (For FDs with tenures more than 12 months, the rate is negotiable).
Standard Chartered Up to 60 months 2.95% to 3.25% p.a.
UOB Up to 60 months 2.95% to 3.25% p.a.
Bank of China Up to 60 months 3.15% to 3.45% p.a.

Types of Fixed Deposit Accounts

Based upon the banking principle

There are two types of fixed deposits based upon the type of banking principles:

Based upon the interest rate

There are the following three types of fixed deposits based on the interest rate variation:

  • Fixed Rate of Interest: The deposits that have constant rate of interest throughout the tenure of the facility come under this category.
  • Step-up Fixed Deposit: In a step-up fd, the rate of interest keeps rising with the progression of the tenure.
  • Fixed Deposit based on CASA Bundling: The fixed deposits based on CASA bundling require you to put a part of your deposit into the current or savings account as well. If you’re required to put more money into CASA account, the interest rates associated to your FD will drop.
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Apart from the above mentioned types, there are fixed deposits that let you invest money in foreign currencies.

Foreign Currency Fixed Deposits

These fixed deposits allow you to invest funds in form of other major foreign currencies like Australian Dollar, Euro, Canadian Dollar, Japanese Yen, US Dollar, etc. Foreign currency fd s are a good way to hedge against fluctuations in exchange rates. You can leave the amount dormant in the fixed deposit to accrue interest and can exchange the currency when the rate is more suitable.

Benefits of Fixed Deposit Accounts

Let’s take a look at the features and benefits associated with a fixed deposit account and the benefits associated with the same:

  • Fixed deposits offer a flexible range of tenures for you to choose from and most deposits come with a maximum tenure of 5 years.
  • The interest rates associated with a fixed deposit is generally higher than that of a savings account.
  • The fixed deposit is a safe and guaranteed way of getting higher returns on your investment.
  • Some deposits also allow you to withdraw the money prematurely to meet emergency expenses. Depending on how early on in the tenure the withdrawal was made, you would be entitled to a portion of the interest or would receive no interest at all..
  • The FD accounts come with a feature of auto-renewal at the time of maturity.

How Fixed Deposits work in Malaysia

Once you choose to invest your money in fixed deposits, you are required to put in a minimum amount of money in the account. You must then choose your desired tenure. There are different interest rates associated with different tenures.Upon completion of the tenure, you can withdraw the fund with the interest earned. You could either withdraw the entire deposit along with the interest or withdraw only the interest and renew the initial deposit amount or choose to have the initial deposit and interest amount renewed. Keep in mind that renewing the deposit might not guarantee the same rate of interest. It could be higher or lower and is subject to the bank’s discretion.

Eligibility Criteria

The following are the eligibility criteria for a fixed deposit account:

  • The minimum age requirement for a fixed deposit account is 18 years. However the banks offering fixed deposits to customers younger than 18 years require them to have an in-trust account in the name of their parents or guardian.
  • Permanent residents of Malaysia, Malaysian citizens, and non-residents can apply for most of the fixed deposit accounts. There are a range of fixed deposit accounts that foreigners can also invest in.

Documents required

The following is the set of documents a fixed deposit account application process may require:

  • For applicants older than 18 years of age: A copy of identity card or passport.
  • For applicants who are younger than 18 years of age: Birth certificate, identity card of parent or guardian, or certificate of the legal guardian.
  • Foreign applicants are required to bring a copy of their passport and a work permit (if any).

Fixed Deposit for Foreigners

The following banks in Malaysia offer a fixed deposit facility to expatriates:

  • Affin Bank
  • AmBank
  • Bank Muamalat (only for foreigners studying in Malaysia)
  • Hong Leong Bank
  • HSBC
  • OCBC
  • Public Bank
  • UOB
  • Bank of China

Fixed Deposit Tenure

The fixed deposits come with a range of tenure to choose from that varies from a minimum of 1 month to a maximum of 60 months.

How to open a Fixed Deposit Account

  • Online application: You can apply for an FD account online at the official site of any bank or financial institution.
  • Offline application: You can also put in your request by contacting the bank through its customer service numbers or by directly visiting the nearest branch of the bank.

Difference between a FD and other investments

The following are the differences between a fixed deposit and other investment services:

  • Fixed deposit (fd) generally come with a higher interest rate range as compared to regular savings accounts but may not be as high as investing in stocks and equities.
  • Fixed deposit come with a wide range of tenures that allow you to invest your money for a short-term as well as for a long-term.
  • Fixed deposit promises you guaranteed returns and is a safer investment scheme.
  • There is no learning curve involved in fixed deposits unlike other investment instruments. Investors simply have to wait for the deposit to attain maturity to get their returns.

Fixed Deposit Promotion

The following are a few examples of fixed deposit promotions in 2019:

  • RHB Term Deposit promotion: With this promotional offer, you can invest in RHB fixed deposit for a 13-month period and get an interest rate of up to 4.25% p.a. on the amount invested.
  • OCBC fixed deposit promotion: You can invest an amount of RM50,000 or more in an OCBC fixed deposit till 17 February 2018 and earn an interest of 4.10% p.a. for a tenure of 15 months.

Loan on Fixed Deposit

Fixed deposits come with the added advantage of acting as security or collateral. Fixed deposits can be used as collateral to secure lines of credit such as personal loans or overdraft facilities. They can even be used to secure a credit card. Loans acquired on a fixed deposit generally carry a lower rate of interest since they are secured by the deposit itself.

Generally the value of your fixed deposit dictates how much of a loan you can borrow. The higher the value of your fixed deposit, the more you can borrow.

Renewal and Withdrawal of Fixed Deposits

You can choose to withdraw the funds at the end of your fixed deposit term or renew it for another cycle. Most of the fixed deposit accounts in Malaysia come with an auto-renewal at the time of maturity.

Renewals can be made in 2 ways. Either you can withdraw the interest earned and renew the initial deposit amount or you could renew both, your interest earned and the initial deposit amount.

Partial and Premature withdrawals

You can also opt to withdraw the funds in case of emergencies or in cases when you need instant cash during the facility’s term.

You should keep in mind that making partial or premature withdrawals can result in little to no earnings. Based on how early on in the tenure the withdrawal was made, you could either get no interest at all or get half the interest that was guaranteed.

Fixed Deposit Calculator

The interest associated with a fixed deposit is calculated on the basis of amount you invest, the tenure you opt, and the interest rate associated with the tenure.

Rules of FD Accounts

The following are the rules of an FD account:

  • Minimum and maximum deposit amount: Fixed deposits come with a minimum deposit requirement and a maximum limit of funds you can put in the account. In order to get an FD account, you need to invest an amount equal to or more than that of the minimum amount required.
  • Taxability of FD: When you opt to invest in an FD, you should also keep in mind that FD can be used for tax relaxation. However, the interest you earn on the deposited amount is not eligible for tax relief.
  • Hazards of premature withdrawal: Most of the FDs come with a high penalty fee when you opt for a withdrawal before maturity of the facility. You can end up losing a huge amount of interest if you decide to discontinue the FD before its maturity.
  • Minimum period for interest earning: Most of the banks and institutions provide interest on FD only after a certain period. If you choose to withdraw from the facility before these period ends, you will not be eligible to earn any interest on your deposit amount.
  • Renewal of the facility: Once the facility reaches its maturity, you can choose to withdraw the whole amount or renew the facility. You can also opt to withdraw only the interest and renew the facility with original deposit amount.

Are my deposits safe?

The deposits are protected by PIDM (Perbadanan Insurans Deposit Malaysia). All deposits that are under RM250,000 are eligible for protection under PIDM. Let’s take a look at how PIDM works.

PIDM Security

PIDM is a government agency that works under Malaysia Deposit Insurance Corporation Act. PIDM governs DIS (Deposit Insurance System) that protects depositors against loss of their insured sum in cases of unlikely events of failure of the member bank. All the banks, both conventional and Islamic, are member institutions of PIDM.

Once you open a deposit account with these banks or institutions, you are automatically eligible for protection under PIDM. The agency provides protection to deposits of up to RM250,000. This includes savings account, current account, foreign currency FDs, fixed deposits among many other financial instruments. The amount includes both the deposit amount and any interest earned on it. Also the limit mentioned above applies separately to conventional and Islamic deposits.

Apart from the above, PIDM also protects deposits that are held under trust accounts, joint accounts, account of companies, sole proprietorships, partnerships, and professional practitioners. If you take a takaful coverage or insurance against your deposit, you are not required to pay any premium to get your FD protected.

Fixed Deposit FAQs

Q. What is the minimum tenure available with an FD?

A. The minimum term associated with an FD is 1 month.

Q. Is there a minimum amount associated with a fixed deposit?

A. The minimum amount associated with a fixed deposit depends upon the tenure you choose. Most of the banks require you to invest a minimum of RM5,000 for a 1-month term, and a minimum of RM1,000 for tenures of 2 months and more.

Q. When and how can I withdraw partially from an FD before its maturity?

A. You can opt for a partial withdrawal from your FD account but this would result in a loss of interest earned on the funds.

Q. Can I open an FD account on a joint basis with my spouse?

A. Yes, most of the banks let you open an FD account on a joint basis.

Q. How can I keep a track of my FD account?

A. You can track your FD account through monthly statements.

Q. Is it allowed to fully withdraw the FD amount before the facility matures?

A. Most of the banks allow you to withdraw the entire amount of your FD before its maturity.

Q. Can an FD contribute to tax relaxation?

A. Yes, you can get tax exemption with the help of an FD.

Q. Is there a maximum limit of amount I can invest via an FD?

A. The maximum limit of an FD amount can vary from bank to bank.

Q. How will I receive the funds once I decide to withdraw the amount at the maturity date of my FD?

A. The amount will get credited to your bank account.

Q. Can I get different interest rates if I’m a senior citizen?

A. Yes, most of the banks offering specific FDs for senior citizens generally have a higher interest rates than the regular FD accounts.

Q. What are the currencies other than Malaysian Ringgit that a foreign currency FD accepts?

A. The foreign currency FDs cover foreign currencies like US Dollar, Australian Dollar, Japanese Yen, Euro, Canadian Dollar, Swiss Franc, Chinese Yuan, Great Britain Pound, Hong Kong Dollar, New Zealand Dollar, Singapore Dollar, Thai Baht, among other major currencies.

Q. What is corporate fixed deposits?

A. Similar to a fixed deposit offered by a bank or a financial institution, corporate FDs are fixed deposits that are offered by corporate companies at a higher rate of interest.

Q. What is an eFD?

A. eFD is an online fixed deposit account that can be monitored through the bank’s web portal.

Q. Do I get a certificate of investment with my FD?

A. Yes, you get a physical certificate with your FD for your reference.

Q. If I choose not to withdraw money from the FD at its maturity and decide to renew it, can I change the term?

A. Yes, at the time of maturity of the FD, if you choose to renew the facility, you can revise the term associated with your FD.

News About Fixed Deposit

  • Cash Threshold Report lowered to RM25,000 from the earlier RM50,000

    The central bank of Malaysia has brought down the Cash Threshold Report (CTR) to RM25,000, effective 1 January 2019. The move, aimed at reducing illicit transactions and money laundering, revises the earlier CTR of RM50,000.

    Malaysian commercial banks will now report all cash transactions amounting to the limit to Bank Negara Malaysia (BNM). This includes all cash transactions. The new limit applies to local and foreign currency transactions in cash, as well as, travellers’ cheques. However, fixed deposit rollovers are not subject to this report. Electronic transfers are also exempted.

    The CTR does not restrict cash transactions amounting to more than the limit but makes a customer declaration mandatory in such cases. Customers who exceed the limit within a single day, via single or multiple transactions, must declare the fund source and transaction purpose.

    Further, the CTR requirement also operates at the aggregate of cash transactions per day, whether withdrawal or deposit. Transactions will have to be reported if the aggregated amount falls over the limit, even if the multiple individual transactions don’t. For example, neither an RM15,000 withdrawal nor an RM20,000 deposit on the same day exceeds the limit individually. However, the transaction would still have to be reported as the daily aggregate amounts to RM35,000.

    BBazaar Malaysia

    18 January 2019

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