Personal Finance Term
Fixed Deposit
A savings instrument where you lock in a sum with a bank for a fixed tenure (1–60 months) in exchange for a guaranteed interest rate higher than a regular savings account.
FD rates in Malaysia are influenced by BNM's OPR. When OPR rises, FD rates typically follow within weeks. Conventional FDs are protected by PIDM (Perbadanan Insurans Deposit Malaysia) up to RM250,000 per depositor per bank. The Islamic fixed deposits we read (BSN, RHB) are built on Tawarruq (commodity murabahah); BSN's Term Deposit-i, for example, uses Tawarruq together with a Wakalah (agency) contract, according to its product disclosure sheet.
FD tenure ranges from 1 to 60 months. Promotional rates (usually 1–3 months) are often higher than standard rates. Breaking an FD early can cost you all the interest: Hong Leong, Public Bank, BSN and RHB pay no interest or profit on premature withdrawal on the terms we read (we could not read every bank's terms, so check yours).