Fixed Deposit Interest Rates In Malaysia

Fixed Deposit Interest Rates In Malaysia

What Are Fixed Deposit Accounts?

Fixed Deposits (FD) or Time Deposits are accounts that offer a fixed, guaranteed rate of interest for a fixed period of time.

What Factors Determine Fixed Deposit Rates?

Fixed deposit rates are determined by the bank issuing the fixed deposit. However, there are a number of factors that influence the bank’s decision on fixed deposit rate determination. These include changes to the OPR or the Overnight Policy Rate (determined by Bank Negara Malaysia; this is the rate at which depository institutions (banks) lend to one another overnight), the Base Lending Rate (the rate determined by conventional financial institutions based on their cost of lending to consumers), the BLR’s successor, the Base Rate (BR), the Base Financing Rate (BFR; the rate determined by Islamic financial institutions based on their cost of financing to consumers), Statutory Reserve Requirement (the amount of money a bank should have on deposit with the BNM at zero interest) and other factors.

What Are The Rates Currently Available For Fixed Deposits In Malaysia?

Conventional Fixed Deposits

The Citibank Time Deposit is available for tenures of 1 month to 60 months. The minimum deposit for a month is RM 1,000 and for 2 to 60 months is RM 5,000. Overdraft facility is available against the fixed deposit and partial withdrawals are also allowed (in multiples of RM 5,000; the balance will continue to earn interest).

The MYR Fixed Deposit from OCBC is available in a variety of tenures ranging from 1 month to 5 years. If you have a fixed deposit of RM5,000 and above, you may also be able to avail an overdraft against your deposit. The minimum deposit is RM 1,000 for tenures of 2 months and above and RM 5,000 for a tenure of 1 month.

Junior & Senior Fixed Deposits

These deposit products are aimed at children (to help them inculcate the savings habit) and seniors (usually the over 50s). They carry higher interest rates than standard FD products. You could try opening FDs in your children / parents’ name(s).

The Hong Leong Senior Savers Flexi FD and the Hong Leong Junior Fixed Deposit offer interest rates of 3.35% p.a. This compares favourably with Hong Leong’s Fixed Deposit Account that offers interest rates ranging from 2.95% to 3.20%.

Foreign Currency Deposits

The Foreign Currency Fixed Deposit from CIMB Bank is available in 10 foreign currencies. You can place deposits for tenures of 1 Day, 1 Week, 1 Month and up to 1 Year. Interest rates vary with currency and tenure. This deposit is eligible for PIDM protection.

The Foreign Currency Deposit from Standard Chartered Bank is available in tenures ranging from 1 week to 1 year; these deposits are also eligible for PIDM protection.

Islamic Banking and Finance Products in Malaysia

Islamic Banking and Finance Products in Malaysia
Islamic Banking and Finance Products in Malaysia

With 16 fully-fledged Islamic banks and several other Islamic banking “windows” operated by conventional banks, Islamic banking and finance in Malaysia is poised to spread its wings even further. The implementation of the Islamic Financial Services Act 2013 (IFSA) has given a further boost to the Islamic banking and finance industry.

What is Islamic banking and finance?

Islamic banking and finance is banking/finance based on Islamic law (Shariah). It follows the Shariah, called fiqh muamalat (Islamic rules on transactions). The rules and practices of fiqh muamalat came from the Quran and the Sunnah, and other secondary sources of Islamic law such as opinions collectively agreed among Shariah scholars (ijma), analogy (qiyas) and personal reasoning (ijtihad).

Malaysia’s Islamic bank assets total US$135 billion (RM 434 billion), which accounts for 21% of the country’s total banking assets as on May 2014. Here, we will take a look at some of the main Islamic banking and finance products available in Malaysia:

Islamic home financing – Islamic home financing in Malaysia takes the following forms:

Murabahah – A cost plus profit mark-up agreement. Here, the bank buys an asset and sells it to the customer at a pre-agreed profit or mark-up. Generally, this term is used to describe financing agreements with tenors less than 12 months.

Bai’ Bithaman Ajil (BBA) or deferred payment sale – Here, the bank buys the property and sells it to the customer at an agreed mark-up. The customer makes installment payments (principal + mark-up) to the bank over an agreed tenor. After completion of all payments, property ownership is transferred to him.

Musharakah Mutanaqisah (MM) or diminishing mutanaqisah – The bank and the customer buy a property as partners with the bank usually holding most of the share. Over time, the customer makes installment payments (principal + mark-up) gradually acquiring more of the property till he becomes sole owner.

Islamic credit cards – Lets look at the two main Shariah principles upon which Islamic credit cards operate:

Ujrah (Fee) – Here, the bank imposes a charge or fee on the customer for the use of the card and the benefits, privileges and services that come with it.

Bai Al-Inah – This is a sale contract with immediate repurchase. It takes place when a person sells an asset in credit and immediately buys back the asset in cash at lower price.

Islamic hire-purchase – Islamic hire-purchase facilities in Malaysia operate under the concept of Al-Ijarah Thumma Al-Bai (AITAB) which is in turn comprised of two separate contracts; the first is Al-Ijarah (lease) under which the hirer hires the goods from the owner at an agreed rental over a specified period of time. The second is the addition of an option to purchase (Bai); upon the expiry of the hiring period, the hirer is given an option to enter into a second contract to purchase the goods from the owner at an agreed price.

Islamic insuranceAlso known as Takaful this involves a group of participants who mutually guarantee (Taawun or mutual assistance) each other against loss or damage. Every participant makes a contribution (Tabarru) into a common fund pool which is managed by a Takaful operator who operates using either Mudharabah (profit sharing) or Wakalah (agency).

When a participant suffers damages, the Takaful operator makes appropriate payouts. Surplus remaining after making compensatory payments will be shared amongst the participants. Takaful is thus a protection and a profit sharing measure.

Online Banking Provides Convenience and Satisfaction for Customers

Online Banking Provides Convenience and Satisfaction for Customers
Online Banking Provides Convenience and Satisfaction for Customers

With 31 banks offering Internet banking and with nearly 19 million Internet banking subscribers conducting more than 210 million banking transactions with a value of 2.33 billion Ringgit, as on June 2015 / first half of 2015, Online or Internet banking has become a very popular means of conducting banking in Malaysia.

And, when queried most online banking customers swear by the convenience and satisfaction that online banking affords. Here, we will try and take a look at what makes online banking so convenient and satisfactory for customers:

Anytime, anywhere access

As an online banking user, you get 24 hours * 7 days a week * round the year access to a wide range of banking services. And, you get this access from wherever you are – whether in Malaysia or overseas and at whatever time that feels convenient for you. And, this access is immediate depending only upon the speed of your Internet connection!

Real-time

Online banking is real-time! You can track and monitor your transactions as and when they happen. And, if you notice anything out of the ordinary, you can immediately flag it up to your bank.

Wide range of banking services

As an online banking user, you can conduct a whole range of banking transactions. These include opening or closing term deposits, transferring funds, paying bills, managing cheques, trading, investing, changing your account limits, applying for credit cards or loans – the list is virtually endless.

Online Banking also provides you with the facility to link all your accounts – savings, current, term deposits, loans, credit cards under the same account name. With all your banking accounts under one roof you can better manage your spending and saving. You can set standing instructions for regular bill payments and since you know your spending patterns well you can also set instructions for sweeping account surplus to term deposits thus enhancing your savings. Financial management becomes so much more easier.

Online banking – security

Banks take utmost pains to ensure a safe and pleasant banking experience when you visit them online. In fact, almost all banks use a 128-bit Secure Socket Layer (SSL), which is one of the strongest encryption technologies used by large-scale online merchants, global banks, and brokerages worldwide.

In addition, various banks have different authentication procedures in place that enhance the security of your banking. Finally, you can also opt to receive real-time alerts and reminders through SMS and/or email whenever transactions (financial or non-financial) occur on your account. You can get on top of possible frauds as soon as they occur.

Free

Accessing and using online and mobile banking is free. Of course, your Internet or mobile provider will charge your for your Internet usage. And, certain services used through online banking may be charged. These could include interbank transfers, telegraphic transfers, cheque book requisitions etc.