Fixed Deposit Interest Rates In these times of uncertain returns, fixed deposits have become the most preferred banking instruments for planning a financially worry-free future for the family. Which is why Mahindra Finance’s Fixed Deposit scheme has been specially designed to assure you of guaranteed returns at highly competitive interest. Fixed Deposit maturity amount can be calculated using the FD Calculator in a simple manner using the below steps: Customer will have to select the Customer Type i.e. Normal or Senior Citizen; Select the type of Fixed Deposit i.e. Cumulative or Interest Payout (Quarterly/Monthly) or Short Term FD.
Fixed deposit also called time deposit is a type of bank account that gives account owners a fixed amount of interest. In exchange, the account owners agree not to withdraw their funds for a certain period of time. Account owners do not need to do anything for their money to earn.
What Is A Fixed Deposit Account? A Fixed Deposit account (FD) is a financial instrument offered by banks, which allows you to save your money for a fixed period of time to generate higher interest compared to a conventional savings account. In many western countries, FD is also known as term deposit or time deposit. Avail of a loan facility up to 90% of principal and accrued interest, safe custody of your FD receipts and automatic renewal of Deposit Account on completion of tenure. Loan against the fixed deposit maybe given to the depositors at the discretion of the bank. A fixed deposit (FD) is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date.It may or may not require the creation of a separate account. It is known as a term deposit or time deposit in Canada, Australia, New Zealand, India and The United States, and as a bond in the United Kingdom.
As a result, this type of savings or investment account is favoured by those who have a large amount of money to spare for a long period of time. While fixed deposit accounts do not earn much compared to other forms of investment, it is considered a safe investment.
Average Fixed Deposit Rate
In Singapore, banks offering fixed deposit accounts have different interest rates. These interest rates are dependent on how much the account owner deposited and how long the deposit will stay in the bank. This means that the fixed deposit interest rate dictates how much the account owner will earn.
In most cases, fixed deposit interest rates are usually very low. They are usually under 1%. This interest rate is so much lower compared to other types of investment. If you think that you can live off of this interest rate earning, you are wrong.
Given the low average interest rates of fixed deposits, account owners must regard their fixed deposits as a form of passive income. You will not get rich, but it is a good thing that your deposit account is earning. Also, however little these interest rates of fixed deposits are, they still gave higher interest rates compared to a savings account.
The Best Fixed Deposit Singapore
Disclaimer: Rates change monthly and can be changed by the banks anytime.
The usual rate is under 1% and can go as high as 1.8 to 2% p.a. Due to the economic downturn, fixed deposit rates remain low.
How to Calculate the Interest Return on a Fixed Deposit?
After knowing the usual interest rates of fixed deposit accounts, you must also learn how to calculate your potential earnings. Before opening a fixed deposit account in Singapore, you can do the computation so that you can have an idea if this option works for you best. The first thing to do is to identify how much deposit amount you are willing to give. Remember that this deposit amount should not be touched for a specific period of time, usually around 3 months or even 12 months.
The banks multiply the deposit amount by the interest rate, and by the length of time you are willing to keep your deposit with them. It means that your earnings will be computed as the deposit amount x interest rate x months of deposit. This is basically the formula used by banks to compute your earnings. Note that the interest rate varies from the promotional rates of the banks.
Let’s just say that you have 20,000 dollars to spare as your deposit amount and that you are willing to deposit is as long as 12 months. For the sake of discussion, let’s assume that the interest rate per year is at 1%. So the computation becomes. 20,000 dollars x 1% x 12 = 240 dollars.
The 12 months of your 20,000 dollars in your fixed deposit account would only earn $240. This is a reminder for account holders that the higher deposit amount and the longer time they can keep their money untouched means high income. Also, account holders must look for banks that offer high promotional rates.
Why Open a Fixed Deposit Account
If you have successfully saved and have no plan in the near future to spend this saving, opening a fixed deposit account might be a good decision for you.
Instead of putting your money on a savings account where your money is basically sleeping and losing its value, you might opt to have a fixed deposit account instead. In this type of account, you can earn a little amount of money from the interest of your deposits. Without doing anything, your money is earning for you.
Also, if you are afraid of risks or do not think that the economy is right for a risky investment, a fixed deposit is a good option. Banks in Singapore offer good rates for money stored in your banks.
You just have to look for a bank that has good deposit promotions and has awesome interest deals. In this type of account, you can be sure that your fresh funds or your deposits are earning from the fairly reasonable interest rates of banks.
During times of economic crisis, a lot of people in Singapore also choose a fixed deposit account because other forms of investment are simply not possible in these difficult times. Depositing their earnings on a reliable financial institution is one way to keep their finances secure. While doing so, their money is earning from the interest rates imposed by the banks.
Pros and Cons of a Fixed Deposit in Singapore
Simply put, here are the pros of choosing a fixed deposit account:
- It has a higher interest return compared to a regular savings account. If you are planning to save on your banks, you better choose this option because it will earn you more than other types of savings account. Without basically doing nothing, your money is earning. You just leave your money to your trusted bank and they will do the work for you.
- Fixed deposits Singapore accounts are safe and do not expose account owners to any type of risk. Being a fixed deposit account owner, you should not fear that you will lose your money overnight. You are guaranteed that your money will earn interest as long as you leave your money to the banks to a given period of time.
- Starting a fixed deposit account is easy in Singapore. You can invest for as low as $5,000 for as short as 1 month. For young professionals and middle-class, these are enticing options. If you are afraid of using your savings on risky investments, fixed deposits might be best for you.
Note that banks have a varying minimum deposit. If you wish to deposit a small amount fo money, you can look for the bank that offers a very low minimum deposit. For beginners who do not have much experience in fixed deposit accounts or in bank deposits in general, finding for a bank with a low minimum deposit is the best option.
On the other hand, fixed deposit accounts have downsides as well. Here are some:
- This type of account requires you to not do any type of withdrawal. You are basically locked out of your own money. Even in emergency situations, you cannot spend the money that is already in your bank.
- Once you do any type of withdrawal before the maturity of your account, you may lose all the interest you earned. This would mean that your years of waiting is put to waste. If you encounter an emergency and badly need cash, you could lose the interest you are supposed to earn. This arrangement is simply impossible for individuals who do not have enough savings for emergency situations.
- Your money is dependent on a single investment. Instead of using your money to invest in a business or other opportunities, you are basically putting your resources into one basket. If you believe that you have better investment opportunities than a fixed deposit account, this arrangement is not for you.
Eligibility and Requirements
The next things to know now are the eligibility and requirements needed to open a fixed deposit account. Remember that opening a fixed deposit account is similar to doing any transactions with banks.
You have to present certain requirements to prove to the bank of your sincerity to enter a transaction and contract with them. Also, note that these eligibility and requirements are dependent on a lot of things which means that you have to identify first the category you belong to.
For Singapore citizens and Singapore permanent residents, you only need to submit one requirement. This is your:
- NRIC.
NRIC stands for the National Registration Identity Card. All Singapore citizens and Singapore permanent residents have this card, so presenting this must not be an issue. Just bring with you your NRIC when you visit the bank.
Meanwhile, foreigners in Singapore have to submit more documents compared to Singapore citizens and permanent residents. They need to present the following documents:
Fixed Deposit Interest Rate In Singapore
- Passport
- Proof of address
- Employment pass
- Dependent pass
- S pass
- Student pass or long term visit pass
Note that each bank sometimes has certain requirements. This means that it is best to approach your bank of choice if you truly are determined to open a fixed deposit account. Make sure to submit all the requirements of the bank you chose.
Also, when applying for fixed deposits, banks in Singapore have allowed for two options. These are:
- Bank visits. For the first option, you have to make an appointment at your trusted bank and bring with you your deposits and the required documents.
- Online. For the second option, most banks offer OCBC, CIMB, DBS, and Maybank fixed deposit options where a client with an existing savings account or current account can easily create a fixed deposit account with just a few clicks.
One important reminder here is to research how banks have different deals for their fixed deposit accounts. Contact your local banks to know their minimum deposit, deposit promotions, and promotional rates before deciding to open an account.
Remember, deposit promotions and promotional rates have a lot to do with your earnings. Choosing the bank with the best deposit promotions and other promotions, rates, and deals will benefit you in the long run.
Conclusion
The low-risk nature of fixed deposit accounts in Singapore has made a lot of people looking for best fixed deposit banks. A lot of individuals have seen how fixed deposit accounts offer a safe and secure way of saving their money. Despite the positive attributes of fixed deposits, it is important for people to learn that fixed deposits are not for everyone.
Fixed deposit accounts do not promise wealth. The interest rates of the banks are not enough to ensure account holders instant wealth.
Also, earnings from fixed deposit accounts really depend on the deposit amount and the length of time the money stays in the bank. This means that those with limited deposits and can only keep their money in banks for a limited amount of time virtually earn nothing from fixed deposit accounts.
Fixed deposits are term deposits or these deposits are a high interest-bearing deposit and offer a wide range of tenures ranging from 7 days to 10 years. In a Fixed deposit, depositors can deposit the fixed amount for the fixed period in the bank. If the depositor wants to premature the account then the bank charged some penalty. Banks pay higher interest rates on longer-term deposits.
At the time of maturity there are five types of options available for calculating the maturity amount.
- When Principal and the interest are redeemed at the time maturity
Suppose Ramesh wants to open the fixed deposit amounting Rs.5,00,000/- for 1 year and he wants to redeem all the amount at maturity. Then what will be the total amount credited in Ramesh account at the time of maturity? Rate of interest assumed as 7% p.a
Rs.5,00,000 *7%=Rs 35,000/-
Total amount at the time of Maturity is Rs.5,00,000+ Rs.35,000=Rs.5,35,000/-
- FD booked with Quarterly Payout.
When your Fixed Deposit is booked with the quarterly interest payout option, the maturity amount is the same as the principal amount. The interest amount will be credited to your account at quarterly intervals.
Example for Quartley PAyout:
Fixed Deposit Interest Rate 2015
Suppose Ramesh wants a Fixed deposit of Rs. 5000 for 1 year with Quarterly Interest payout assuming the rate of interest @7%p.a.In quarterly interest payout, Interest is calculated on monthly basis and credited to the customer account on every quarter. In this example, interest on Rs 5000 is calculated every month @5000*7%*30/365=28.69. Then add the three months interset 28.69+29.64+28.69=Rs.87 is credited to the customer account in first quarter and so on.
The Total Interest amount is Rs.349/- and the quarterly interest will be credited to the Ramesh account. At the time of Maturity, the Principal amount will be credited to his account.
- FD booked with Monthly Payout:
With Reference to the first example, the monthly interest will be credited to the customer account and the Principal Amount will be created at the time of maturity.Monthly interest i.e. Rs.5000@7%*30/365=Rs.28.69.Rounded off (Rs.29/-) credited to customer account every month and the principal amount Rs.5000/- credited at the time of maturity.
- Short Term Fixed Deposits
A Person can open the short term fixed deposits for a period of 7days to 10 years. At the time of maturity, the principal amount will be credited with the interest in the account.
Suppose Rs.5000 is deposited for a period of 60 days and the rate of the interest is 7% p.a. Interest amount will be calculated as follows:
The total amount credited at the time of maturity is Rs. 5057/-
- FD Booked with Reinvestment or Cumulative Fixed deposit
In a cumulative fixed deposit, interest is reinvested with the principal amount and compounded as per the time period mentioned. The maturity of these fixed deposits ranges from six months to 10 years.
Suppose Rs.5000/- is deposited for 2 years with the reinvestment.ROI @7% p.a.In cumulative Fixed deposit, Interest is calculated on monthly basis and added to the principal amount on every quarter. In the first quarter the interest for three months amounts Rs.76 credited to the principal amount and then in next quarter interest is calculated on Rs.5000+76=Rs.5076/- and so on.
The total amount credited at the time of maturity is Rs.5647/-
- The amount mentioned in the example is an indicative figure.
- Please refer to the FD Calculator to get the exact maturity amount.
Premature FD
As per the Terms & Conditions of Fixed Deposit Accounts of the bank, the penalty on premature closure of Fixed Deposits, including sweep-in and partial closures, has been fixed by the Bank at the rate of 1% of the fixed deposit interest rate. This is applicable with effect from 24th January 2011.
Senior Citizen Interest Rate.
Bank will give a 0.5% extra interest rate to the senior citizen customer of the bank.
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