Maturity value and interest on a Malaysian fixed deposit.
Maturity value
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Interest earned
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Principal
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Your breakdown
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Item
Amount
Worked example
Take RM50,000 placed in a 12-month fixed deposit at 3.5 percent a year. Held to maturity, the interest is simply the principal times the rate times the fraction of a year, so it is RM50,000 times 3.5 percent times 12 divided by 12, which is RM1,750. The maturity value is the RM50,000 principal plus the RM1,750 interest, giving RM51,750. Because interest earned by an individual on a licensed-bank fixed deposit in Malaysia is tax-exempt, the full RM1,750 is yours to keep with nothing withheld. If the tenure were only 6 months at the same rate, the interest would halve to RM875, since the time fraction would be 6 divided by 12.
Item
Amount (RM)
Principal
50,000.00
Rate and tenure
3.5% for 12 months
Interest earned (tax-free)
1,750.00
Maturity value
51,750.00
How it is calculated
A fixed deposit pays a set rate for a set tenure, and the typical convention for a deposit held to maturity is simple interest. The interest equals the principal times the annual rate times the tenure in months divided by 12, and the maturity value adds that interest back to the principal. Rates vary by bank, tenure, and deposit size, and many banks run promotional tiers that pay more for larger or longer placements. Interest from a licensed bank or finance company is tax-exempt for individuals, so there is no withholding to deduct, and deposits are protected by PIDM up to RM250,000 per depositor per member bank. Breaking an FD early usually forfeits some or all of the interest, so the figure here assumes you hold to the end of the chosen tenure.
Frequently asked questions
Is fixed deposit interest taxed in Malaysia?
Interest earned by an individual on fixed deposits with a licensed bank in Malaysia is tax-exempt, so the maturity value you see is what you keep. The interest shown here uses the simple-interest convention typical of an FD held to maturity, calculated as the principal times the annual rate times the tenure in months divided by 12. Rates and promotional tiers vary by bank and deposit size.
What is the PIDM protection limit on fixed deposits?
Fixed deposits with a licensed bank in Malaysia are protected by PIDM (Perbadanan Insurans Deposit Malaysia) up to RM250,000 per depositor per member institution. Amounts above that threshold are not covered. Spreading large sums across multiple PIDM-member banks is a common way to stay within the protection limit on each account.
How does a fixed deposit compare with an ASB investment?
A fixed deposit locks in a known rate at the time of placement and pays simple interest at maturity. ASB (Amanah Saham Bumiputera) is a unit trust open to Bumiputera investors and has historically paid dividends in the 4 to 6 percent range, but the rate is declared annually and is not guaranteed in advance. An FD offers certainty; ASB has historically delivered a higher return but with year-to-year variability.
What happens if I break my fixed deposit early?
Breaking an FD before the maturity date typically forfeits some or all of the accrued interest, depending on your bank terms. Some banks pay a reduced rate for the portion of tenure completed; others forfeit the interest entirely. Always check the premature-withdrawal terms before placing a deposit you might need to access before it matures.