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25 January 2009

What are fixed deposits?

What are fixed deposits?

Fixed deposits are loan arrangements where funds are deposited into an account under the name of the account holder. These fixed deposits funds earn a fixed rate of interest, according to the terms and conditions offered by banks and financial institutions.

In a nutshell, you lend money to the bank (the deposit) for a fixed period of time. At the end of this fixed period, the bank returns you all your deposit (also known as principal sum) plus an extra amount known as the fixed deposits interest payment.

What is so good about fixed deposits?
It is a safe, low risk and secure form of investment to earn extra Ringgit Malaysia.

What are the downside risks of fixed deposits?
Money placed in a fixed deposits account cannot be withdrawn prior to the maturity date. Otherwise there will be financial penalties. Fixed deposits rates may rise during the tenure of your placement, leaving you to lose out on the higher interest rates offered to new depositors of fixed deposits.

What other factors do I need to consider before I open fixed deposits?
In addition, you should consider other factors before you open a fixed deposits account.

1) Premature fixed deposits withdrawals: If I need to prematurely withdraw my fixed deposit, will the bank pay the interest for the period the deposit was placed with it? If so, how will the interest be computed?

2) Fixed Deposit Account Closure Charges: What are the penalty or charges I have to pay, if any, for prematurely withdrawing my fixed deposit with the bank or financial institution?

3) Rollover of fixed deposits: If my fixed deposit matures and I leave it in the bank, will the bank pay me interest on the fixed deposit for the period until I withdraw it?

4) Withdrawals of fixed deposits on maturity: What identification do I need to present when I withdraw my fixed deposit?

5) Loss of fixed deposit receipt: What if I lose the original fixed deposit receipt?

6) Public Holidays: What if the maturity date falls on a public holiday?

Thank you for reading Malaysia Fixed Deposits, where we bring you the best and latest fixed deposits rates in Malaysia to help you make more money.