Best Islamic Fixed Deposits in Malaysia 2025

Conventional fixed deposits have always been the go-to savings option for Malaysians, offering locked-in money, guaranteed returns, and complete risk-free. But there’s a catch if you’re Muslim: those “guaranteed returns” come from interest, which violates Islamic principles against riba.

Islamic fixed deposits solve this dilemma. Instead of predetermined interest, your money gets invested in halal businesses, and you receive a share of the profits generated, typically 70-80% of returns. Right now, that works out to 2.50% to 3.80% annually, depending on your tenure, matching conventional FD rates while staying fully Shariah compliant.

At a Glance

• Islamic FDs use profit-sharing (Mudarabah, Wakalah) instead of interest
• Current rates: 2.50% to 3.80% p.a. at major Malaysian Islamic banks
• Minimum deposits start from RM500 (CIMB Islamic, RHB Islamic)
• PIDM protects deposits up to RM250,000 per depositor per bank
• Early withdrawal forfeits most or all profits
• All Islamic FDs are certified halal by bank Shariah committees
• Non-Muslims can open Islamic FDs too

What is an Islamic Fixed Deposit?

An Islamic fixed deposit works just like a conventional FD. You lock money away for a fixed period, but instead of earning predetermined interest (which violates Islamic law), you receive profit returns from the bank’s halal business investments.

Deposit RM10,000 with Maybank Islamic for 12 months. Your money is invested in Shariah-compliant activities like trade financing for Malaysian companies, property development, and sukuk (Islamic bonds). At the end of your tenure, you receive your principal plus a share of the profits generated from these investments, typically 70-80% of total returns.

The key advantage? Your returns come from actual business profits, not interest (riba). All Islamic FDs in Malaysia are certified halal by independent Shariah committees at each bank, ensuring your money never supports prohibited industries like alcohol, gambling, or conventional lending.

How profits are determined: Your funds are pooled with the funds of other depositors and invested in halal businesses. If those investments earn 4% returns and your profit-sharing ratio is 80:20 in your favour, you receive 80% of that 4%, effectively 3.2% on your deposit. The bank advertises this as an “indicative profit rate” of 3.20% p.a.

In practice, Malaysian Islamic banks consistently meet or exceed their indicative rates by investing conservatively and maintaining profit equalisation reserves to smooth out variations. The theoretical risk of reduced returns if investments underperform is minimal; banks have honoured their indicative rates for over 30 years.

Islamic FD vs Conventional FD: The Key Difference

The fundamental difference is how returns are generated. Conventional FDs pay guaranteed interest rates calculated as a percentage of your principal. Islamic FDs provide profit returns based on actual investment performance.

Conventional FD example: Place RM50,000 at 3.50% for 12 months. You’ll receive exactly RM1,750 in interest, guaranteed. The bank can do whatever it wants with your money, including lending it out at higher interest rates to earn a profit.

Islamic FD example: Place RM50,000 with Bank Islam at an indicative 3.50% profit rate for 12 months. The bank invests your money only in halal activities. If investments perform well, you receive your RM1,750 (or more). If investments underperform, your returns could theoretically be reduced, though in practice, this never happens.

Both options are protected by PIDM up to RM250,000. Both offer similar rates; in fact, Islamic FDs sometimes pay slightly higher. The real difference is the underlying mechanism and Shariah compliance, not the actual returns you’ll receive.

Current Islamic FD Rates at Malaysia’s Major Banks

Here are the latest indicative profit rates from Malaysia’s top Islamic banks, updated December 2025:

12-Month Islamic Fixed Deposit Rates

Rates as of December 2025. Promotional rates are typically valid for 1-3 months on new placements only.

Bank Muamalat currently offers the highest promotional rate at 3.75% p.a. for deposits of RM10,000 and above. Hong Leong Islamic Bank and MBSB Bank have the most accessible entry points at RM500 minimum, making them good starting points if you’re testing Islamic FDs for the first time.

What these rates mean in actual ringgit:

• RM10,000 at Bank Islam’s 3.65% promotional rate for 12 months = RM365 profit
• RM10,000 at Bank Muamalat’s 3.75% promotional rate = RM375 profit
• RM50,000 at Bank Muamalat’s 3.75% promotional rate = RM1,875 profit
• RM100,000 at Bank Muamalat’s 3.75% promotional rate = RM3,750 profit

The difference between the highest promotional rate (Bank Muamalat at 3.75%) and the lowest standard rate (Hong Leong Islamic at 2.05%) is 1.70 percentage points. On a RM50,000 deposit, that’s RM850 extra per year, making it worth comparing rates across multiple banks before placing your funds.

For comparison, conventional FD rates at the same banks currently range from 2.00% to 2.30% for 12-month tenures. Islamic FDs match or exceed conventional rates in promotional offerings—you’re not sacrificing returns for Shariah compliance.

How Islamic FD Rates Increase with Longer Tenures

Islamic FD rates rise steadily as you commit your money for longer periods, rewarding you for reduced liquidity with higher profit returns.

Maybank Islamic Tenure Comparison (RM10,000 deposit)

The rate jumped from 1-month (1.80%) to 60-month (2.15%), representing a 0.35 percentage point difference. On a RM50,000 deposit, that's RM175 extra per year just for committing to the longer tenure.

That said, longer tenures lock your money away. If you withdraw a 36-month FD after 12 months, you'll forfeit all profits under Maybank Islamic's premature withdrawal policy. Without providing 31 days' prior written notice, you receive zero profit. With notice, you'd only receive 50% of the accrued profit based on actual placement days.

Only commit to long tenures if you're certain you won't need the funds before maturity.

Strategic approach: Spread deposits across multiple tenures with staggered maturity dates. Place RM10,000 each in 6-month, 12-month, 18-month, 24-month, and 36-month FDs. This gives you regular access to maturing funds whilst capturing higher rates on the longer tenures—what's known as "laddering" your deposits.

Mudarabah Islamic FDs: Profit-Sharing Partnerships

Mudarabah is the most common Islamic FD contract in Malaysia, used by Maybank Islamic, CIMB Islamic, and Bank Islam for their standard products. It works like a business partnership: you provide the money, the bank provides the investment expertise, and you split the profits.

Deposit RM30,000 with Maybank Islamic for 12 months under a Mudarabah contract with an 80:20 profit-sharing ratio. The bank invests your money in halal activities, such as trade financing for Malaysian companies, sukuk bonds, and commodity trading. If those investments earn RM1,200 in profits during the year, you receive 80% (RM960) whilst the bank keeps 20% (RM240).

That RM960 represents a 3.20% return on your RM30,000 deposit, which is why the bank advertises an “indicative profit rate” of 3.20% p.a. for this product.

The practical difference from conventional FDs: With a conventional FD, your 3.20% return is guaranteed regardless of how well the bank performs. With Mudarabah, your return depends on actual investment profits. If the bank’s investments only earn RM900 instead of RM1,200, you’d receive 80% of RM900 = RM720 instead of RM960.

However, this theoretical risk is minimal. Malaysian Islamic banks have consistently met or exceeded their indicative rates for decades by investing conservatively and maintaining profit equalisation reserves to smooth out variations.

When to choose Mudarabah: This structure gives you maximum profit potential when banks perform well. Choose Mudarabah if you’re comfortable with the profit-sharing concept and trust the bank’s investment management—which you should, given their 30+ year track record of meeting indicative rates.

Banks offering Mudarabah: Maybank Islamic, Bank Islam, CIMB Islamic, AFFIN Islamic, RHB Islamic

Wakalah Islamic FDs: Investment Agency Agreements

Wakalah is an agency arrangement where you appoint the bank as your investment agent. Instead of sharing profits directly, the bank charges an upfront or performance-based fee, and you receive the remaining profits.

Deposit RM40,000 with CIMB Islamic for 24 months under a Wakalah contract. The bank invests your money in halal activities and charges a 0.50% annual management fee (RM200 per year). If investments earn RM2,800 over 24 months, you receive RM2,800 minus RM400 fees = RM2,400 net profit.

That RM2,400 represents a 3.00% annual return on your RM40,000 deposit. The bank advertises this as an indicative 3.00% p.a. profit rate after deducting their fees.

The key difference from Mudarabah: With Mudarabah, profits are shared as a percentage (80:20). With Wakalah, the bank takes a fixed fee, and you keep the rest. If investments outperform expectations significantly, you benefit more under Wakalah because the bank’s fee stays fixed rather than taking a larger percentage.

Risk allocation: Under Wakalah, you technically bear more of the investment risk because the bank gets its fee regardless of performance. Under Mudarabah, both parties share the risk more evenly. In practice, both structures deliver similar returns because banks manage risk conservatively for both contract types.

When to choose Wakalah: Choose Wakalah if you prefer fee transparency and want to maximise upside potential when banks perform exceptionally well. The practical difference in returns is usually negligible—contract type matters less than the advertised indicative rate.

Banks offering Wakalah: Al Rajhi Bank, Bank Muamalat

Commodity Murabahah: Trade-Based Islamic FDs

Commodity Murabahah is a trade-based structure that mimics conventional FD mechanics more closely. The bank buys commodities (usually metals on the London Metal Exchange), sells them to you at a markup, then buys them back at maturity.

Deposit RM25,000 with Public Bank Islamic for 6 months under Commodity Murabahah. The bank buys RM25,000 worth of copper, sells it to you for RM25,000 plus a RM375 markup (representing 3.00% annual return), and agrees to buy it back at maturity for RM25,375.

From your perspective, you place RM25,000 and receive RM25,375 six months later—identical to a conventional FD earning 3.00% p.a.

Why this structure exists: Commodity Murabahah provides returns very similar to conventional interest-based FDs, while maintaining technical Shariah compliance through the buying-and-selling mechanism. It’s popular with banks because it’s simpler to manage than Mudarabah or Wakalah, and popular with conservative depositors who want predictable returns.

Shariah perspective: Some Islamic scholars consider Commodity Murabahah less ideal than Mudarabah because the commodity trading is purely a legal fiction—the commodities are never actually delivered, and the structure exists solely to replicate conventional FD mechanics. That said, all major Malaysian Islamic banks’ Shariah committees have approved Commodity Murabahah products.

When to choose Commodity Murabahah: Choose this if you want returns closest to a conventional FD’s guaranteed nature. The profit mechanism is more transparent (fixed markup) and doesn’t depend on actual business investment performance.

Banks offering Commodity Murabahah: Al Rajhi Bank, RHB Islamic, Alliance Islamic, AmBank Islamic

Comparing Islamic FD Contract Types

Here’s how the four main contract types stack up:

The practical reality: Most Malaysian Islamic banks offer identical rates regardless of contract type. A 12-month Islamic FD at 3.25% p.a. delivers the same returns whether it’s structured as Mudarabah, Wakalah, or Commodity Murabahah.

Focus on comparing actual profit rates, tenures, minimum deposits, and promotional offers across banks rather than worrying about contract types, as all four structures are certified halal and deliver comparable returns.

What Affects Your Islamic FD Profit Rate

Several factors determine the profit rate you’ll receive on your Islamic FD.

Deposit amount: Larger deposits often qualify for higher rates. Many banks offer tiered rates: 2.85% for RM1,000-RM9,999, 3.00% for RM10,000-RM49,999, and 3.25% for RM50,000+. Check tier breakpoints before depositing—adding RM1,000 more might bump you to a higher rate tier.

Tenure length: Longer commitments earn higher rates, as shown in the tenure comparison table earlier. The sweet spot is usually 12-24 months, where rates are meaningfully higher than short-term tenures, but you’re not locked in for years.

Bank competitiveness: Rates vary between banks. Right now, Bank Muamalat offers a 3.75% promotional rate, while Hong Leong Islamic offers a 2.05% standard rate for the same 12-month tenure. That 1.70% difference means RM850 per year on a RM50,000 deposit—worth comparing across at least three banks.

Promotional campaigns: Banks regularly run limited-time promotions offering 0.15-0.30% above standard rates. These typically target new funds only (you can’t just move an existing FD to capture the promotion) and last 1-3 months. Check our Best Fixed Deposit Promotions page for current offers.

Overall market conditions: When Bank Negara Malaysia raises the Overnight Policy Rate (OPR), Islamic FD rates typically increase within 1-2 months. When OPR falls, rates decline. Track OPR announcements to time your deposits. If rates are rising, wait; if rates are falling, lock in now.

New vs existing customer: Some banks offer better rates for new customers or new-to-bank funds. Moving your deposit from Maybank Islamic to Bank Islam might qualify you for a promotional rate, while renewing your existing Maybank Islamic FD might only get the standard rate.

PIDM Protection: Your Deposits Are Government-Guaranteed

All Islamic fixed deposits at Malaysian banks are protected by Perbadanan Insurans Deposit Malaysia (PIDM) up to RM250,000 per depositor per bank.

What this means: If your bank faces financial difficulties or collapses, PIDM guarantees your principal and accrued profits up to RM250,000. This protection applies automatically, and you don’t need to register or pay fees.

Example of PIDM coverage: You have RM200,000 in an Islamic FD with Maybank Islamic, earning RM6,000 in annual profit. If Maybank Islamic fails, PIDM covers your full RM206,000 (principal + accrued profit) because it’s under the RM250,000 limit.

If you have RM300,000 in an Islamic FD with Bank Islam, PIDM covers RM250,000, and you’d lose RM50,000 in a bank failure scenario.

How to maximise PIDM protection: Spread large sums across multiple banks. Place RM250,000 with Maybank Islamic, RM250,000 with Bank Islam, and RM250,000 with CIMB Islamic, giving you RM750,000 in fully protected deposits instead of partial coverage at one bank.

PIDM protection has never been tested by a major bank failure in Malaysia, but the guarantee is backed by the government and provides peace of mind for risk-averse savers.

How to Open an Islamic Fixed Deposit

Opening an FD account takes 5-15 minutes if you’re an existing customer with internet banking, or 20-30 minutes for new customers visiting a branch.

If you’re an existing customer: Log in to your bank’s mobile app or internet banking. Look for “Islamic Fixed Deposit” or “Investment Account” in the menu. Select your tenure (1 month to 60 months), enter your deposit amount, choose your profit payout frequency (monthly, at maturity, etc.), and confirm. Your FD is active immediately, and funds are transferred from your savings account.

If you’re a new customer: Visit a branch with your MyKad or passport, proof of address (utility bill or bank statement from the last 3 months), and your initial deposit amount. The bank officer will open a basic savings account first, then create your Islamic FD. Total process: 30-45 minutes, including documentation.

Documents required:

• Malaysian citizens: MyKad only (if existing customer), MyKad + proof of address (if new customer)
• Permanent residents: Passport + valid visa + proof of address
• Foreign account holders: Passport + visa + proof of local address + tax identification

Choosing your settings:

• Tenure: Match to your financial timeline (don’t commit for 24 months if you’ll need the money in 12)
• Profit payout: Monthly for income, at maturity for compounding
• Auto-renewal: Set to auto-renew at prevailing rates or manual renewal for flexibility
• Contract type: Usually pre-selected by the bank (Mudarabah or Wakalah); ask if you have a preference

After opening, you’ll receive a certificate or digital confirmation showing your principal, tenure, indicative profit rate, maturity date, and PIDM protection status.

Early Withdrawal: When You Need Your Money Back

Islamic FDs allow early withdrawal, but you’ll forfeit most or all of your profits depending on when you withdraw and which bank you’re using.

Bank-specific early withdrawal policies:

Maybank Islamic: For placements from 1 January 2019 onwards, early withdrawal follows a two-tier system:

• Immediate withdrawal (without 31 days’ prior notice): No profit paid. You forfeit all contracted profit.
• Withdrawal with 31 days’ prior written notice: Bank pays 50% of profit based on actual placement days. You forfeit the remaining contracted profit.

Bank Islam: For placements from January 2019 onwards:

• No profit is paid for any premature withdrawal, regardless of how long the FD has been placed
• You must pay 50% of the total brokerage fees to the bank
• The bank does not charge additional administrative penalties beyond the brokerage fee

CIMB Islamic: For placements from 1 November 2018 onwards:

• No profit is paid for any fully or partially withdrawn amount before the completion of tenure
• This applies regardless of placement duration—whether you withdraw after 1 month or 11 months of a 12-month tenure

RHB Islamic: For placements from January 2019 onwards:

• No profit is paid for any premature withdrawal before maturity
• For partial withdrawals, a minimum RM1,000 withdrawal in multiples of RM1,000
• The remaining balance must be at least RM10,000 after a partial withdrawal
• You waive rights to claim the full Deferred Sale Price upon withdrawal

Example of early withdrawal impact: Place RM20,000 with Maybank Islamic for 12 months at 3.25% p.a. (expected profit: RM650).

• Withdraw after 6 months without notice: You receive RM20,000 principal only. No profit. Lost: RM650.
• Withdraw after 6 months with 31 days’ notice: Accrued profit for 6 months = RM325. Bank pays 50% = RM162.50. You receive RM20,162.50. Lost: RM487.50.

Compared to a 6-month FD at 2.85% which would have paid RM285, the 12-month FD withdrawal still underperformed even with the 31-day notice option.

When early withdrawal makes sense: If you face a genuine emergency (medical bills, job loss, urgent home repairs) and have no other liquidity sources, withdraw your Islamic FD. Losing RM500 in profits is better than taking on high-interest debt.

But for non-emergencies, avoid early withdrawal. Plan your tenures carefully, maintain a separate emergency fund in accessible savings accounts, and only lock away money you genuinely won’t need.

Islamic FDs vs Other Shariah Savings Options

Islamic fixed deposits aren’t your only Shariah-compliant savings option. Here’s how they compare.

Islamic savings accounts: Offer instant access to your money with profit rates of 0.25-0.80% p.a. Use these for emergency funds and short-term savings. They’re liquid but earn minimal returns compared to Islamic FDs.

Best for: Emergency funds, money you’ll need within 3 months

Cash management accounts (Shariah): Offer FD-like returns (2.50-3.00% p.a.) with easier access, typically allowing 2-4 withdrawals per month without penalties. Require higher minimum balances (RM10,000-RM50,000).

Best for: Medium-term savings with some liquidity needs

Islamic unit trusts: Invest in Shariah-compliant stocks, sukuk, or mixed portfolios. Potential returns: 4-8% annually, but with volatility. Your capital isn’t guaranteed, and you might lose 10-20% in bad years or gain 15-25% in good years.

Best for: Long-term growth (5+ years), higher risk tolerance

ASB/ASN (Amanah Saham Bumiputera/Nasional): Government-linked Shariah funds offering dividends of 4-6% p.a. with exceptional stability. Limited to Bumiputera investors with maximum investment caps.

Best for: Bumiputera investors seeking stable medium-term growth

EPF (Employees Provident Fund): Mandatory retirement savings offering 5.00-6.00% returns (conventional and Shariah options available). Locked until age 55 except for specific withdrawal purposes (housing, education, medical).

Best for: Long-term retirement savings (unavoidable for employees)

Strategic allocation: A balanced Shariah-compliant portfolio might look like:

• 20% in Islamic savings accounts (emergency fund)
• 40% in Islamic FDs (1-3 year goals)
• 30% in Islamic unit trusts (5+ year growth)
• 10% in cash management accounts (flexible medium-term)

Adjust based on your risk tolerance, timeline, and liquidity needs.

Building an Islamic FD Ladder Strategy

FD laddering spreads deposits across multiple tenures with staggered maturity dates, balancing higher rates with regular access to funds.

Example Islamic FD ladder with RM50,000: Instead of placing all RM50,000 in one 24-month FD at 3.50%, create a ladder:

• RM10,000 in 6-month FD at 2.85% (matures June 2026)
• RM10,000 in 12-month FD at 3.25% (matures December 2026)
• RM10,000 in 18-month FD at 3.40% (matures June 2027)
• RM10,000 in 24-month FD at 3.50% (matures December 2027)
• RM10,000 in 36-month FD at 3.65% (matures December 2028)

Benefits of laddering: Every 6 months, one FD matures, giving you access to RM10,000 plus profits. If you don’t need the money, reinvest in a new 36-month FD at the longest tenure to capture the highest rates. If you do need cash, you have it without early withdrawal penalties.

Your average rate: (2.85% + 3.25% + 3.40% + 3.50% + 3.65%) / 5 = 3.33% across the portfolio—higher than a 12-month FD (3.25%) but with better liquidity than a 36-month FD.

Adapting ladders to rate environments:

• When rates are rising: Create shorter ladders (6, 12, 18, 24 months), so funds mature sooner to reinvest at higher rates
• When rates are falling: Create longer ladders (12, 24, 36, 48, 60 months) to lock in current rates before they drop
• When rates are stable: Use the standard ladder shown above for balanced returns and liquidity

Automation: Some banks allow you to set Islamic FDs to auto-renew at the longest tenure when they mature. This automates your ladder strategy. Each matured FD rolls into a new maximum-tenure deposit, maintaining your ladder structure.

Common Mistakes to Avoid with Islamic FDs

Locking all your savings: Don’t place 100% of your money in Islamic FDs. Maintain at least 3-6 months of living expenses in an instantly accessible Islamic savings account. Early withdrawal penalties make FDs a poor emergency fund.

Chasing 0.05% rate differences: Don’t move banks for tiny rate differences. A 0.05% difference on RM20,000 is RM10 per year. If the new bank requires you to open accounts, transfer funds, and manage multiple banking relationships, the hassle isn’t worth RM10.

Missing promotional deadlines: Promotional rates (typically 0.15-0.30% above standard) often have short application windows and require new funds. If you spot a strong promotion, act quickly, as they usually last 2-4 weeks.

Assuming all Islamic FDs are identical: Contract types, early withdrawal policies, and profit calculation methods vary between banks. Read the terms carefully, especially if you might need to withdraw early.

Forgetting PIDM limits: If you have more than RM250,000 in Islamic FDs, spread across multiple banks to maximise PIDM protection. Don’t keep RM500,000 at one bank where only half is protected.

Not comparing conventional vs Islamic rates: Sometimes conventional FDs offer 0.10-0.20% higher rates. If Shariah compliance isn’t a requirement for you, compare both options before deciding.

Using Islamic FDs for Specific Goals

House down payment (2-3 year goal): Place your down payment savings in 12-month and 24-month Islamic FDs. As each matures, assess whether you’re ready to buy. If not, roll into a new 12-month FD. This keeps your savings growing at 3.25-3.50% whilst maintaining relative flexibility.

Child’s education (5-10 year goal): Create a ladder with 12, 24, 36, 48, and 60-month Islamic FDs. As your child approaches university age, shorter tenures mature, providing funds for tuition. For longer-term education savings, consider mixing Islamic FDs (40% of portfolio) with Islamic unit trusts (60%) for higher growth potential.

Emergency fund buffer (immediate access needed): Don’t use Islamic FDs for emergency funds. Keep these in Islamic savings accounts earning 0.50-0.80% with instant access. Islamic FDs should only hold money you’re certain you won’t need before maturity.

Wedding expenses (12-18 month goal): Place savings in a 12-month Islamic FD to earn 3.25% rather than leaving it in a savings account earning 0.50%. Set the maturity date 2-3 months before your wedding to give yourself a buffer for early withdrawal if plans change.

Retirement income supplement: For retirees or near-retirees, create a 12-month Islamic FD ladder with monthly profit payouts. Place RM300,000 across 12 separate RM25,000 FDs, each maturing in a different month. Set profit to pay out monthly. This creates a predictable RM750-RM800 monthly income stream (at 3.25% p.a.) while preserving capital.

Tax payment fund: If you’re self-employed or have annual tax liabilities, place tax savings in 12-month Islamic FDs timed to mature 1-2 months before tax deadlines. This keeps your money earning 3.25% instead of sitting in a savings account earning 0.50% throughout the year.

Frequently Asked Questions

Can non-Muslims open Islamic fixed deposits?

Yes. Islamic FDs are available to all Malaysians and permanent residents regardless of religious faith. Non-Muslims interested in ethical profit-sharing banking can access Islamic FDs on the same terms as Muslim customers. Banks don’t ask about your religion when opening Islamic accounts.

What happens if the bank doesn’t generate enough profit to meet the indicative rate?

Theoretically, your returns would be reduced proportionally since Islamic FDs are profit-sharing arrangements. In practice, Malaysian Islamic banks almost always meet or exceed indicative rates by maintaining Profit Equalisation Reserves (PER) and Investment Risk Reserves (IRR). These reserves smooth out variations in investment performance. Instances of banks failing to honour indicative rates are extremely rare, and it hasn’t happened at major Malaysian Islamic banks in over 30 years.

How do Islamic FD rates compare to conventional FD rates?

Islamic FD profit rates currently match or come within 0.05-0.25% of comparable conventional FD interest rates. As of December 2025, 12-month Islamic FD promotional rates range from 3.50-3.75%, whilst standard rates range from 2.05-2.25%. Conventional FDs at the same banks range from 2.00-2.30%. In promotional offerings, Islamic FDs sometimes exceed conventional rates.

Is my Islamic FD protected if the bank fails?

Yes. PIDM (Perbadanan Insurans Deposit Malaysia) protects Islamic FDs up to RM250,000 per depositor per bank, covering both your principal and accrued profits. This protection applies automatically without requiring registration or fees. PIDM is a government agency backed by Malaysia’s financial system.

Can I withdraw my Islamic FD before maturity?

Yes, all Malaysian Islamic banks permit early withdrawal. However, policies vary significantly between banks. Maybank Islamic offers 50% profit with 31 days’ notice. Bank Islam, CIMB Islamic, and RHB Islamic pay no profit for any premature withdrawal from January 2019 onwards. Check your specific bank’s policy before placing funds, as early withdrawal can mean forfeiting all profits.

Are Islamic FD profits taxable?

No. Individual Islamic FD profits are not taxable in Malaysia. You receive the full profit amount without any tax withholding. This applies to all personal Islamic FD accounts. Business accounts may have different tax treatment. Consult a tax advisor for business Islamic FD placements.

What’s the difference between Mudarabah and Wakalah Islamic FDs?

Mudarabah is a profit-sharing partnership where you receive a percentage of profits (typically 70-80%). Wakalah is an agency arrangement where the bank charges a fee, and you receive the remaining profits. In practice, both structures deliver similar returns because banks advertise identical indicative rates regardless of contract type. The structural difference matters more to Shariah scholars than to your actual returns.

Can I open Islamic FDs in foreign currencies?

Yes. Major Islamic banks offer foreign currency Islamic FDs in USD, SGD, EUR, GBP, AUD, and other currencies. Minimum deposits are typically higher (USD 5,000 or equivalent) compared to MYR Islamic FDs (RM500-RM1,000). Foreign currency FDs add exchange rate risk. If the foreign currency weakens against MYR, you could lose money despite earning a profit.

Do Islamic FDs require monthly fees or account maintenance charges?

No. Islamic fixed deposits don’t charge monthly account maintenance fees. You earn profits without any deductions for account servicing. Some banks charge small fees (RM10-RM20) for issuing replacement certificates if you lose your original, but ongoing fees don’t apply.

Can I add money to an existing Islamic FD?

No. Islamic FDs are fixed-amount deposits. To deposit additional funds, you must open a separate Islamic FD. At maturity, you can renew with a higher principal amount by adding your earned profits to the principal. This is called “compounding” and effectively increases your returns over time.

How long does it take to open an Islamic FD?

Online applications through mobile banking or internet banking take 5-15 minutes for existing customers. Branch applications for new customers take 20-45 minutes, including documentation (MyKad, proof of address, initial deposit). Once opened, your FD is active immediately, and profit starts accruing from day one.

What documents do I need to open an Islamic FD?

Existing bank customers need only their MyKad for identity verification—the process takes 5 minutes in mobile banking. New customers require MyKad or a passport, proof of address (utility bill or bank statement from the last 3 months), and the initial deposit amount. Foreign account holders additionally need a valid visa and tax identification documents.

Can I have multiple Islamic FDs at the same bank?

Yes. You can open multiple Islamic FDs with different amounts, tenures, and maturity dates at the same bank. This lets you create a laddered deposit strategy with staggered maturities. There’s no limit to how many Islamic FDs you can hold—place RM10,000 each in 6, 12, 18, and 24-month tenures for regular maturity access.

Are Islamic FDs available for business accounts?

Yes. Islamic banks offer business Islamic FDs with similar structures to personal deposits. Business FDs typically require higher minimum amounts (RM10,000-RM50,000) and business registration documentation (SSM certificate, company bank statements). Profit rates are usually identical to personal Islamic FD rates for comparable tenures.

What happens to my Islamic FD if I pass away?

Your Islamic FD becomes part of your estate and passes to your beneficiaries according to your will (wasiat) or faraid (Islamic inheritance law) if you have no will. The bank pays out the principal plus accrued profits to your estate executor or administrator. Consider creating a will to specify how the Islamic FD proceeds should be distributed.

Can I use my Islamic FD as collateral for a loan?

Yes. Most Islamic banks allow you to pledge your Islamic FD as collateral for personal loans or financing. This typically lets you borrow up to 90-95% of your FD value at lower profit rates (around 4-6% p.a. instead of 8-15% for unsecured loans). Your FD continues earning profit whilst serving as collateral.

How do I compare Islamic FD offers across different banks?

Use our online comparison platforms, where we aggregate current rates from multiple Islamic banks. You can filter by tenure, minimum deposit, and banks. Alternatively, visit individual bank websites to review published indicative profit rates, terms, and promotional offers. Compare at least 3-4 banks before deciding.

Ready to Start?

Islamic fixed deposits combine the financial discipline of committed savings, the ethical satisfaction of Shariah compliance, and competitive returns matching conventional FDs. Whether you’re Muslim seeking halal banking or simply interested in profit-sharing over predetermined interest, Islamic FDs offer a straightforward way to grow your money.

Start by evaluating your savings timeline. Can you commit funds for 6 months? 12 months? 24 months? Match your Islamic FD tenure to when you’ll genuinely need the money, as early withdrawal penalties negate the benefit of higher rates.

Compare current rates across at least three major Islamic banks. Use our Best Fixed Deposit Promotions page to check for limited-time promotional offers that boost returns by 0.15-0.30% above standard rates.

Open your first Islamic FD with a modest amount—RM5,000 or RM10,000—to familiarise yourself with the process, documentation, and how profit payments work. Once you’re comfortable, scale up to larger deposits and create a laddered strategy with staggered maturities.

And keep enough emergency savings separate in instantly accessible Islamic savings accounts. Islamic FDs work best for money you genuinely won’t need until maturity, not for funds you might need on short notice.