Interest rates for SGD fixed deposits vary across Singapore, according to a variety of factors. By understanding these factors and setting expectations based on an average, it's possible to optimise your deposit earnings.
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Average Interest Rate for a Singapore Fixed Deposit
Banks across Singapore offer SGD fixed deposit accounts, each with varying interest rates based on deposit size and tenure. In every case, a deposit's interest rate determines how much a consumer will earn from their investment. As of 2019, the average interest rate for SGD fixed deposits is 0.92% p.a. This average considers both promotional and board rates.
|Average Interest Rates by Deposit Size and Tenure 2019|
|Short Tenure (3, 6 Mo)||0.41%||0.64%||0.77%|
|Medium Tenure (9, 12 Mo)||0.71%||1.02%||1.09%|
|Long Tenure (24, 36 Mo)||1.14%||1.14%||1.20%|
As mentioned, interest rates differ based on how large of a deposit is made and how long it's held by the bank. In many cases, interest rates remain fairly stable regardless of deposit size, though some banks offer higher rates for larger deposits. On the other hand, longer tenures almost always earn at higher interest rates, especially those 12mo+ in length. At the intersection of these factors, short-term small deposits tend to garner the lowest interest rates, while long-term large deposits often earn the highest.
How to Calculate your Fixed Deposit Earnings
Interest rates are key to determining a fixed deposit's ultimate earnings. In order to calculate earnings, several components are needed: the amount of the deposit ("principal"), the interest rate ("per annum"), and the deposit tenure. To determine earnings, multiply the principal by the interest rate by the tenure, formatted as a fraction of a year, as seen below.
Example of Calculating Interest Earned from a Fixed Deposit
|Interest Rate (% p.a.)||0.95%|
|Tenure of Deposit||0.5yr (6mo)|
|Total Interest Earned||S$47.50|
This calculation illustrates the relationship between deposit size, tenure and earnings–regardless of interest rate, increasing either of these factors will boost overall earnings from the deposit.
How to Structure Your Deposit for Optimal Earnings
Banks offering fixed deposits often display their interest rates in a grid, crossing deposit size with tenure. At the intersection of these variables, you'll find the offered interest rate. If you have flexibility, you may want to increase deposit size or tenure to boost your interest rate. However, it's also worth keeping in mind that most banks offer periodic promotional rates, and that interest rates vary across banks, even for the same deposit size and tenure. In order to optimise your earnings, determine your own flexibility and research several banks before committing.