Business Finance

Why Should You Consider Having A Fixed Deposit Account?

26 October 2022

Protected by Perbadanan Insurans Deposit Malaysia up to RM250,000 for each depositor.

There's an age old Malay idiom which advises us to “prepare the umbrella before the rain”.

Given how uncertain the times that we are currently living in is, this well-known idiom has become quite relevant. While it is great to be optimistic about having a financially stable life, there is no harm in being well prepared for potential “rainy days” which may arise when we least expect it. This is also applicable to business owners as well.

This is where Fixed Deposits (FDs) come in, a reliable financial offering that can be considered as a stable and consistent investment.

At the end of this article, you will learn how FDs will be able to make a difference in your life and how it may impact your business' cashflow.

So what is a Fixed Deposit (FD)?
A fixed deposit is an account that is made when a certain amount of money is deposited and sealed for a set period of time. The person who invests his funds is required to set the duration (terms) desired, which easily can be anywhere from a month to sixty months.

In the act of sealing these funds, a fixed rate of interest is given in return and it is worth mentioning that the rate of interest offered may be higher than that of a savings account; however all banks offer fixed deposits at different rates.

To understand whether investing in a fixed deposit is the best option, we need to take a look at the advantages and disadvantages of a fixed deposit account.

  1. Assured Rate of Return
    The interest rate on an FD is fixed, which means irrespective of market situations, the investment is secure. Interest can still continue to be earned with the principal amount till the FD's maturity.

  2. Flexible Tenure and Amount
    The different tenures available are short-term, mid-term or long-term. There is usually no lower limit on how much to put into a FD account hence making it possible for anyone to open an FD. However, a minimum of RM5,000 will be required for 1-month placement; for any other tenures only a minimum of RM500 is required.

  3. Loans against FD
    Looking for a business loan but don't have any collateral to offer? Don't worry, an FD can be pledged which may then assist you in getting a better percentage for the loan amount*.

    * The loan amount will depend on the FD amount and your bank’s terms and conditions.
  1. Fixed/Reducing Interest Rates
    An FD interest rate does not move in line with inflation.

  2. Inaccessible Funds/Penalties
    Funds set aside for an FD are not available to be used unless the funds are withdrawn prematurely. Premature withdrawal of the funds will incur full interest penalty from the bank upon premature withdrawals.
How is the interest paid?

With Alliance Bank Fixed Deposit, the interest may be paid monthly, annually or upon maturity (at the end of the fixed term). Interests can be credited to the Alliance Bank Buiness Current Account or it can be added into the FD principal for rollover.

What happens at the end of the term?

When an FD matures, reinvestment may be considered with a new term, or a different amount. It can also be withdrawn. All of this can be done wherever you are through the Alliance BankBizSmart® Online Banking and via BizSmart® Mobile App, so you are notrequired to visit a bank branch.


At the end of this article, you may still be wondering, is an FD right for my business?

Start first by asking yourself,

  1. What are your short and long term business goals? For example, does it involve saving up for equipment upgrades, introducing new inventories or extra funds needed for opening up new premises in the future?
  2. Can you set aside the investment amount without impacting your current cashflow?

From there, you will be able to determine the appropriate terms which are aligned with your business goals and start planning your course of action to ensure your future finance are safely invested.

Learn more about Alliance Bank's FD Account here.

If you already own an FD, use Alliance Bank Online Banking or BizSmart® Mobile App for easy tracking of your FD status.