How Fixed Deposits Work (And Who Are They For)

22 May 2026

A fixed deposit (also known as term deposit) is a type of savings account that offers a higher interest rate on your savings, but requires you to hold your funds for a stipulated period. This means you may not withdraw your funds partially or in full during the term of the deposit.

If you need to make a withdrawal, you typically have to end your fixed deposit by making an early redemption. In some cases, all interest may be forfeited, so you’ll only get back the amount you initially deposited, and some banks will even penalise you by charging a fee.

As such, proper usage of a fixed deposit hinges on ensuring you commit to the entire duration of the fixed deposit duration. This will allow you to earn the stated returns. To facilitate this, providers like MariBank offer several terms to choose from, so you can pick one that suits your circumstances best.

Just like with savings accounts, fixed deposits are insured by the Singapore Deposit Insurance Corporation (SDIC). At MariBank, your fixed deposits and other deposits are covered for up to S$100,00 in aggregate.

How does a Fixed Deposit work?

To better understand how a fixed deposit works, it’s important to understand the key components in play, which includes:

Deposit amount
Tenor or duration of the fixed deposit
Interest rate
Maturity and pay out
Any penalties for early redemption

Let’s discuss each in turn.

Deposit Amount

Fixed deposits commonly require a minimum amount of funds (call this “fresh funds”) to be deposited in order to qualify for the interest rate offered. This minimum deposit amount varies between banks.

Typically, fixed deposits require minimums of S$500 to S$1,000 for basic tiers, but some providers may also offer larger fixed deposits in the range of S$5,000 to S$20,000 or more.

The deposit amount needs to be deposited in one lump sum and upon doing so, your fixed deposit will begin.

And with Mari Fixed Deposit, you can start depositing from just S$100!

Tenor or duration of the Fixed Deposit

The tenor of the fixed deposit simply means the duration that you will need to hold your funds, without withdrawals or making any other alterations.

As mentioned earlier, fixed deposits come in a variety of tenors, making it convenient for depositors to choose a duration that suits their timeline. Commonly, fixed deposits in Singapore are available tenors ranging from 3 months to 2 years.

The Mari Fixed Deposit comes in 1-month, 3-month, 6-month and 12-month tenors for greater flexibility.

Fixed interest rate

Fixed deposits offer fixed interest rates that are locked in for the chosen duration. You will receive returns on your deposit according to the interest rate offered, provided you maintain your deposit amount for the entirety of the selected tenor.

This makes it easy to predict your returns and plan your finances over the long term, especially if you’re looking to stack several fixed deposits to continuously earn better returns.

Maturity and pay out

At the end of the tenor, the fixed deposit matures. At this point, you may be able to choose whether to pay out, or rollover your funds for another run. If you choose to pay out, your fixed deposit will terminate, and you will receive the amount you originally deposited, along with the interest earned.

Meanwhile, rolling over your fixed deposit will restart the timer on your tenor (be it 3 months, 6 months or however long you originally chose). Once the tenor comes to an end once more, you will earn the stated interest.

You may be wondering “Can I withdraw my fixed deposit before its maturity date?”

In most cases, you should be able to withdraw your fixed deposit early. However, this will terminate your fixed deposit, and you may receive less or no interest as a result.

Why choose a Fixed Deposit?

Fixed deposits may be less flexible than regular savings accounts, but they offer distinct benefits.

Guaranteed returns

Fixed deposits provide guaranteed returns that are higher than basic bank interest, and all you have to do is maintain your funds for the complete tenure. There’s no need for salary credit, minimum spends or other transactions, making fixed deposits one of the most fuss-free options to get better returns on your money.

Safety and security

Fixed deposits in Singapore enjoy the same level of protection as regular bank deposits. They are covered by SDIC for up to S$100,000, ensuring your funds remain safe. This is only applicable to Singapore Dollars (SGD).

Flexible tenor

To better address the needs of fast-paced modern lifestyles, fixed deposits are offered in various tenors, ranging from as short as one month to a couple of years. This flexibility means you can more easily find a tenor that suits you, helping you enjoy better returns on your deposits.

How is the interest on a Fixed Deposit calculated?

Note that the fixed deposit interest offered is denoted in per annum (p.a.) terms, and you can use this to calculate your returns.

For example, let’s say you have a fixed deposit with 1.2% p.a. Interest. You choose to deposit S$1,000 for 6 months. Here’s how much interest you’re entitled to:

Interest earned: (1.2% x 6/12 months) x S$1,000 = S$6
Total maturity amount: S$1,006 after 6 months

Key factors affecting Fixed Deposit interest rates

Two key factors that affect the interest offered on fixed deposits are tenor, and macroeconomic factors.

Different tenors, especially longer ones, tend to attract higher interest rates. This is partially because banks may try to increase interest rates to entice depositors to deposit their funds for a longer time period. It may be worth choosing a longer tenure if you can put aside money for longer.

Meanwhile, it’s important to know that fixed deposit interest rates can change from one run to another; this is common because banks continuously peg interest rates according to central bank decisions and other macroeconomic factors that impact the financial markets.

Here’s what this means in practice. A 6-month fixed deposit that paid out 1.8% p.a. may offer a slightly higher or lower interest rate for the next run. This can impact your plans and forecasts, so it’s important to stay informed if such events are on the horizon.

Fixed Deposits vs Savings Accounts

Wondering how a fixed deposit stacks up against a savings account? Here’s an at-a-glance comparison between both to help you out.

Why choose Mari Fixed Deposit

Mari Fixed Deposit is a highly flexible and simple option to improve the returns on your funds – even on small amounts with short availability.

There’s also a wide range of tenors to choose from – ranging from 1 month to 12 months – for a better fit to your goals.

The bottomline: Mari Fixed Deposit rewards you with guaranteed returns, no matter if a small sum of pocket money, a larger bag you’re setting aside for future use, or anything in between. It’s the smart way to optimise your money.