Fixed Deposit: A Guide For Beginners

One of the ways you can invest your money in Malaysia is by getting a fixed deposit account. It is one of the most stable, secure and convenient investment tools you can use to build up your savings.

Not familiar with fixed deposits? Fret not. Let us guide you through the basics of fixed deposit.

What is a fixed deposit?

Commonly referred to as FD by Malaysians, fixed deposit is a type of investment or bank savings account where you deposit money for a set period, and the bank promises you a fixed interest rate. However, you cannot withdraw or access the funds before the maturity date.

While the bank calculates and pays the interest at the end of every month for a regular savings account, you can only get your interest at the end of the investment period for a fixed deposit account. For example, if you decide to invest your savings for a year, you can only access the principal amount plus interest after a year.

Commonly referred to as FD by Malaysians, fixed deposit is a type of investment or bank savings account where you deposit money for a set period, and the bank promises you a fixed interest rate. However, you cannot withdraw or access the funds before the maturity date.

While the bank calculates and pays the interest at the end of every month for a regular savings account, you can only get your interest at the end of the investment period for a fixed deposit account. For example, if you decide to invest your savings for a year, you can only access the principal amount plus interest after a year.

fixed deposit rhb

What are the types of fixed deposit?

There are different types of fixed deposit accounts available in Malaysia. Every kind of fixed deposit has their terms and condition that is suitable for different types of people.

Short-term fixed deposits

This type of deposits can last for as short as a month to six months. It is suitable for people that have a quick savings goal, and plan to withdraw their money after a short time.

Long-term fixed deposits

It usually takes at least 12 months to consider fixed deposits to be long-term. Sometimes, it can last up for five years. This option is for people that want to enjoy a high-interest rate and can afford to wait.

Islamic fixed deposits

Due to the prohibition of interest (riba) under the Shariah principles, the bank’s performance determines the profit rate for Islamic fixed deposits. Murabahah and Wakalah deposits are examples of Islamic fixed deposits under Islamic banking.

What are the conditions for a fixed deposit account?

How you choose your type of fixed deposits depends on your financial situation. Some things to consider when applying for a fixed deposit includes fees, penalty fees and interest rate.

Fees

There isn’t usually any establishment or setup fees when opening a fixed deposit account, but you should check if there is any in your contract.

Penalty fees

If you decide to withdraw your funds before the end of the investment period, the bank can charge you a penalty fee. Some banks remove a percentage off your interest rate, others charge a “break cost,” a one-time payable fee.

Interest rate

The most important aspect of a fixed deposit account is its interest rate. Usually, the higher the interest, the longer the tenure period. The interest rate ranges from 3-4%, but sometimes banks will offer special promotional rates for short-term deposits.

Conclusion

Rather than letting your savings gather dust in a regular savings account, imagine how much you can build with your savings by getting a fixed deposit account.

Find out the latest fixed deposit rates here: https://www.rhbgroup.com/products-and-services/rates-and-charges/interest-rates/fixed-deposit.