By The Ledger desk · Last verified 4 October 2026
A fixed deposit (called a time deposit at some banks) is money you place with a bank or finance company for a fixed tenor, such as 6 or 12 months, at an interest rate agreed on the day you place it. You get your principal and interest at maturity, and unless you say otherwise many placements auto-renew at the then-prevailing rate. Singapore-dollar fixed deposits are insured by SDIC up to S$100,000 per depositor per member institution; foreign-currency deposits are not. The catch is liquidity: withdraw early and you usually lose most or all of the interest, and some banks say they may also charge an early withdrawal fee.
Fixed deposits are one of the calmest places to park money you will not need for a while. A few minutes on the fine print makes sure the rate you see is the rate you get.
Quick facts
- Banks and licensed finance companies (such as Hong Leong Finance) both offer fixed deposits.
- Promotional rates usually need a minimum sum, commonly S$10,000 or more, and often fresh funds.
- At DBS, interest for new SGD placements is based on your total SGD fixed deposit balance.
- On maturity you can renew principal and interest, renew principal only, or take everything out; tell the bank a working day or two before.
- Breaking an SGD placement early at DBS earns interest only at the bank’s lowest deposit rate; foreign-currency placements earn none.
- SDIC covers eligible SGD deposits up to S$100,000 per depositor per Scheme member, by law.
How a fixed deposit works
- Choose the tenor and amount. Check the minimum for the advertised rate and whether it must be fresh funds (money not already with that bank).
- Place it online or at a branch. The rate is locked for the tenor.
- Set maturity instructions: auto-renew principal and interest, renew principal and pay out interest, or pay out everything.
- At maturity, interest is credited. If it auto-renews, it does so at the prevailing board rate for that tenor, which may be well below the promotional rate you started with.
What breaking one early costs
| Institution (as published, October 2026) | Interest if withdrawn early | Fee |
|---|---|---|
| DBS/POSB, SGD fixed deposit | Calculated at the bank’s lowest applicable deposit rate | DBS says an early withdrawal fee may be imposed |
| DBS/POSB, foreign-currency fixed deposit | No interest | As above |
| OCBC time deposit | Less or no interest, depending on the remaining tenor | OCBC says you may incur an early withdrawal fee |
| Hong Leong Finance (July 2026 promotion terms) | No interest payable | No penalty imposed |
The pattern across institutions is the same: the interest is what you lose. Your principal is normally returned in full, though a fee, where charged, would come out of it. DBS also does not allow a withdrawal on the maturity date or the day before it, and its online withdrawal is not available for foreign-currency or SRS placements.
A worked example (illustrative rates)
You place S$20,000 for 12 months at an illustrative 2.00% a year. Held to maturity, you earn S$20,000 × 2.00% = S$400.
Now say you break it after six months, and the bank pays its lowest deposit rate, taken here as an illustrative 0.05% a year. You earn S$20,000 × 0.05% × 6/12 = S$5, so you give up about S$395 of interest, before any fee. If you might need the money, splitting it into two S$10,000 placements, or a shorter tenor, keeps part of it penalty-free.
Fixed deposits next to the alternatives
Singapore Savings Bonds can be redeemed in any month with no penalty and accrued interest paid, which suits money you may need. Treasury bills lock your money until maturity but can be bought with cash, SRS or CPF. High-yield savings accounts pay bonus interest for salary credit and card spend, but rates can change at any time. A fixed deposit wins when you want a known rate, a known date, and no conditions to meet each month.
The WahLiao Verdict
Use fixed deposits for money with a date on it: next year’s renovation, a tax bill, school fees. Only lock away what you are sure you will not need, ladder larger sums into a few placements, and set maturity instructions to pay out rather than quietly roll over at a low board rate. Keep each institution’s total within S$100,000 if you want full SDIC protection, and keep a separate emergency fund so you never have to break a deposit.
Questions people ask
Will I lose my principal if I break a fixed deposit?
Normally no; you lose some or all of the interest. Some banks state that a fee may also be charged, so check the terms before placing.
What happens if I forget about it at maturity?
If it is set to auto-renew, it rolls over for the same tenor at the prevailing rate, which may be far lower than the promotional rate.
Are foreign-currency fixed deposits insured?
No. SDIC covers Singapore-dollar deposits only. Foreign-currency deposits also carry exchange-rate risk.
Are finance company deposits as safe as bank deposits?
Licensed finance companies are regulated by MAS and are SDIC Scheme members, so eligible SGD deposits are insured up to the same S$100,000 per depositor per member.
Sources: DBS, fixed deposit premature withdrawal; DBS, fixed deposit features and SDIC note; OCBC, time deposit FAQs; Hong Leong Finance, fixed deposit promotion terms (23 July 2026). The Ledger explains; it does not advise.
Read next: Deposit Insurance in Singapore: What SDIC Covers · Singapore Savings Bonds and T-Bills · Back to The Ledger
For what’s worth it this week, with the bill shown, read The WahLiao Week.
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