Place S$50,000 in a 12 month Singapore dollar fixed deposit at a promotional rate of 3.0 percent a year. Because the tenure is a full year, the interest is simply 3.0 percent of S$50,000, which is S$1,500. At maturity the bank returns S$51,500: your original S$50,000 plus the S$1,500 of interest.
If the tenure were 6 months instead of 12, the same 3.0 percent annual rate would earn only half a year of interest, about S$750, since fixed deposit rates are quoted per year. The full S$1,500 lands in your hands because interest from approved Singapore banks is exempt from tax for individuals. Promotional rates usually require a minimum sum and a fresh deposit, and breaking the deposit early typically forfeits some or all of the interest.
Item
Amount
Deposit
S$50,000
Rate and tenure
3.0% for 12 months
Interest earned
S$1,500
Maturity value
S$51,500
How it is calculated
A fixed deposit pays simple interest on your principal for the agreed tenure at the quoted annual rate. The tool multiplies the deposit by the annual rate and then by the tenure expressed as a fraction of a year, so a 6 month deposit earns half of the yearly figure and a 24 month deposit earns twice it. Maturity value is the deposit plus that interest. Interest from deposits with approved banks and finance companies in Singapore is exempt from tax for individuals, so the headline interest is what you keep. Deposits are protected by the SDIC scheme up to S$100,000 per depositor per bank. Promotional rates often need a minimum amount and may not auto renew at the same rate.
Frequently asked questions
Is fixed deposit interest taxed in Singapore?
Interest from deposits with approved banks and finance companies in Singapore is exempt from personal income tax, so you keep the full headline amount. This exemption applies to both Singapore dollar and foreign currency deposits held at banks approved by the Monetary Authority of Singapore. Deposits are also protected by the SDIC scheme up to S$100,000 per depositor per bank.
How does CPF interest compare to a fixed deposit?
CPF Ordinary Account earns a guaranteed 2.5 percent per year and CPF Special and MediSave Accounts earn 4 percent per year, as set by the CPF Board. An additional 1 percent per year is paid on the first S$60,000 of combined CPF balances. Fixed deposits at commercial banks can offer higher promotional rates, but unlike CPF they are not guaranteed by the government and can be broken early with a penalty that forfeits interest.
What happens if I break a fixed deposit early?
Most Singapore banks allow early redemption but will forfeit part or all of the interest earned up to the break date. Some banks apply a sliding scale, keeping a fraction of interest proportional to how long the deposit was held. The principal is always returned in full. Review the specific terms with your bank before placing a large sum, especially if you may need the liquidity.
Are Singapore Savings Bonds a better option than fixed deposits?
Singapore Savings Bonds (SSB) are issued by the Singapore government and backed by its AAA credit rating, making them lower in credit risk than any commercial bank. SSB interest steps up over a 10-year maximum tenure and is also exempt from personal income tax. The key practical difference is flexibility: SSB can be redeemed any month with no penalty and no loss of accrued interest, whereas a fixed deposit locks in funds for a fixed tenure with early-break penalties. Rates for SSB are set each month by MAS and may be above or below bank promotional rates depending on the interest rate environment.