Singapore: Good news as interest rates for both loans and savings accounts rise, fixed deposit rates are increasing too.

Thinking of parking some money in a fixed deposit? Good news as interest rates for both loans and savings accounts rise, fixed deposit rates are increasing too.

Several banks in Singapore have rolled out promotions, with this month’s rates going as high as 2.6 per cent for a 12-month fixed deposit and 2.7 per cent for 24 months.

Most lenders require minimum placements of S$20,000 for these promotional rates.

A fixed deposit, otherwise known as a time or term deposit, allows one to earn a guaranteed amount of interest for a lump sum of money deposited with a bank over a specified duration. Unlike regular savings accounts, customers cannot withdraw this money before the so-called “lock-in” duration is over. 

UOB has been among the more aggressive banks, adjusting its fixed-deposit promotions monthly and offering one of the highest rates across a variety of tenor options so far.

For September, the promotional rate for a 10-month fixed deposit is 2.4 per cent, up from last month’s 1.6 per cent. The 12-month rate is 2.6 per cent, likely the highest in town as of Monday (Sep 5) when CNA did a check across various banks.

UOB’s head of group personal financial services Jacquelyn Tan said: In the current uncertain market environment, we have seen more customers looking for safe havens to protect their wealth.

Another local bank OCBC is offering 2.3 per cent for fixed deposits of 12 months, according to its latest promotional rate released over the weekend.

Changes to its promotions are done in line with market conditions, said the bank’s head of deposits Na Kok Peng. “We will continue to monitor the landscape and ensure our interest rates stay competitive.

Among foreign lenders, RHB has upped its promotional rate for a 24-month fixed deposit to 2.7 per cent per annum from 2.3 per cent. Its 12-month promotion is going at 2.45 per cent, while a six-month deposit earning interest rates of 1.8 per cent is also available for those who prefer a shorter tenor.

Maybank has also rolled out new promotional rates for longer fixed deposit durations this month 2.35 per cent per annum for an 18-month tenor and 2.4 per cent a year for 24 months. These come on top of existing promotional rates of 2.2 per cent and 2.3 per cent for 12 months and 15 months, respectively.

Such a variety caters to different customer preferences and needs, said a spokesperson who added that Maybank pays interest upfront by the next working day after the fixed deposits are placed.

We have been receiving very positive response for our various fixed deposit promotion campaigns, she told CNA.

Also having a promotion this month is Standard Chartered Bank, which is offering 1.8 per cent for a minimum of S$25,000 over 12 months.

The bank also offers a sustainable fixed deposit option, which is described as allowing customers to have their capital referenced against the bank’s sustainable loans and projects. This is also currently going at a promotional rate of 1.8 per cent for a 12-month tenor.

A spokesperson said the sustainable time deposit has been well-received since its launch in December 2020, with demand mostly from customers who want to put their money in a purposeful investment to address long-term environmental challenges.

DBS, Singapore’s largest bank, is the only bank that has not jumped on the bandwagon of promotions so far, but it told CNA that it remains the only bank to have raised board rates or general fixed deposit rates.

Our Singapore dollar fixed deposits are popular particularly among small retail depositors, and our board rates remain competitive after the recent increase in June, the first amongst local banks, said the bank’s head of consumer banking in Singapore Jeremy Soo.

Nonetheless, we are continually reviewing our suite of initiatives and product offerings in order to help our customers to better withstand the inflationary environment across various aspects of their lives.

Unsurprisingly as banks dole out juicy deals, demand for fixed deposits has gone up in recent months.

UOB said the bank’s fixed deposit portfolio has grown 16 per cent in the first seven months of this year, while OCBC said placements it received in August grew 60 per cent from July and nearly 150 per cent from June.

With the rising interest rate environment, customers are seeking higher yields for their deposits, while with higher inflation, customers will see a bigger erosion of their cash value over time, said OCBC’s Mr Na.

Hence, customers today need to make financial plans to outdo inflation over a longer time horizon and naturally, demand for time deposits especially the popular 12-month tenors has increased.

Likewise, Standard Chartered has observed a preference for 12-month fixed deposits, compared to longer terms such as 18 or 24 months in a rising interest rate environment.

Over at RHB, demand for fixed deposits has also been “strong” up about 50 per cent since 2021, said Ms Coreen Kwan, its head of retail bank in Singapore.

I believe in this volatile market environment, many customers will prefer liquidity to protect their savings. So it’s a win-win situation if they can earn higher interest on their savings while safekeeping their funds.

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