Fixed Deposits (FD)

What it is

A fixed deposit is the most familiar product on this list: you place a lump sum with a bank for a fixed term (commonly 1, 3, 6, or 12 months, sometimes longer), and the bank pays a pre-agreed interest rate at maturity. Rates vary constantly by bank, tenor, and promotional campaign, so the "best" FD rate at any given time genuinely depends on shopping around.

Unlike SSB or T-bills, FDs are a bank liability, not a government one -- protected instead by the Singapore Deposit Insurance Corporation (SDIC) up to its coverage limit per depositor per Deposit Insurance Scheme member bank, combining all your deposits at that bank.

How it's structured

• A lump-sum principal placed for a fixed tenor at a fixed interest rate, agreed at the time of placement.
• SDIC insurance covers eligible deposits up to the scheme's per-depositor, per-bank limit -- check the current limit, since it can be revised, and note it applies per bank, not per account.
• Promotional rates are often only available to new funds, specific tenors, or as part of a bundled banking relationship -- the "board rate" for existing customers is usually lower.
• Early withdrawal typically forfeits some or all of the accrued interest, and in some cases a small penalty, depending on the bank's terms.

What kind of return to actually expect

Promotional FD rates have recently ranged roughly 2.5%–3.8% p.a. for shorter tenors during active promotional periods, though board rates for standard placements are typically lower -- always check the specific bank and tenor's current published rate rather than assuming a market-wide figure, since promotions change frequently and vary significantly bank to bank.

Because promotional rates are often front-loaded marketing tools with restrictions (minimum new funds, single tenor, one-time offer), the effective ongoing rate you'd earn on rolled-over FDs is usually lower than the headline number that got you in the door.

The risks, plainly

• Early withdrawal cost -- breaking an FD before maturity typically forfeits accrued interest, sometimes all of it, unlike SSB's pro-rated exit.
• Rate reset risk -- short tenors mean frequent reinvestment at whatever rate is available when each FD matures, which may be lower.
• SDIC coverage limit -- deposits above the per-bank coverage limit are not insured, which matters for larger sums spread thin across accounts at one bank.
• Promotional rate traps -- headline rates often require new funds or come with tenor/amount restrictions that don't apply on renewal.

Who it tends to suit

Suits short-term cash where you're confident you won't need early access before maturity, and where you're actively comparing current promotional rates across banks -- for the same guarantee tier with more flexibility to exit early, compare against SSB first.

This describes how this type of product is typically used -- it isn't a recommendation for your specific situation. Talk to a licensed adviser before deciding.

Common questions

Are fixed deposits guaranteed like SSB or T-bills?

FDs are protected by SDIC insurance up to its coverage limit per depositor per bank -- a different mechanism from the Singapore government's direct backing of SSB and T-bills, and capped rather than unlimited.

What happens if I withdraw an FD early?

Most banks will reduce or fully forfeit the accrued interest for that period; some also apply a small penalty. Terms vary by bank -- check before placing.

Why do promotional FD rates look higher than SSB?

Promotional rates are often short-term marketing offers restricted to new funds or specific tenors -- compare the effective rate on renewal, not just the headline promotional rate, against SSB's published schedule.