Best Long Term Fixed Deposits in Malaysia 2026

Fixed deposits have been the go-to savings option for Malaysians who want guaranteed returns without market risk. Long-term fixed deposits take this a step further by offering higher interest rates in exchange for locking your money away for longer periods, typically 12 months or more.

The trade-off is straightforward. Park your money for a year or longer and you'll earn better rates than short-term deposits. But once you commit, that money stays put until maturity unless you're willing to forfeit your interest earnings.

What Makes Long-Term Fixed Deposits Different

Long-term fixed deposits run for 12 months or more, with some banks offering tenures up to 60 months. The longer you commit, the higher your interest rate climbs. Right now, 12-month rates sit between 2.05% and 2.40% p.a. across Malaysian banks.

Compare this to shorter tenures and the difference is clear. A 3-month FD might earn you 1.85% p.a., while a 12-month placement could fetch 2.30% p.a. On RM25,000, that's an extra RM112.50 in your pocket over the year simply for committing to a longer tenure.

Your deposit is protected by PIDM (Perbadanan Insurans Deposit Malaysia) up to RM250,000 per bank, meaning your principal is safe even if the bank fails. That said, breaking an FD early typically means losing all accrued interest, so only lock away money you won't need before maturity.

Choosing Your Long-Term FD Tenure: A Strategic Guide

Banks offer tenures from 12 to 60 months, and rates increase as you commit for longer periods. The question isn't just "what's the highest rate?" but "which tenure matches my actual needs?"

12-Month FDs: The Sweet Spot for Most Savers

Twelve-month placements offer the best balance between rate and flexibility. You're earning near-maximum rates (typically within 0.05-0.15% of longer tenures) while only committing for a year.

This tenure works well for annual bonuses, tax refunds, or any windfall you won't need until next year. You can time the maturity to coincide with planned expenses like property down payments or major purchases.

At current rates, RM50,000 in a 12-month FD at 2.30% earns RM1,150. That's enough to cover a few months of groceries or a budget domestic flight.

24-Month FDs: When Two Years Makes Sense

Consider 24-month tenures when you have concrete plans requiring cash in two years. Wedding ceremonies, overseas education starting in 2026, or planned vehicle purchases where you're accumulating the down payment.

The rate bump from 12 to 24 months is usually 0.05-0.10% p.a. On RM50,000, that's RM25-RM50 extra per year. Small, but if you genuinely don't need the money for two years, you might as well take it.

Banks also tend to run better promotional rates on 24-month tenures during quarter-end campaigns, sometimes offering 0.20-0.30% above standard rates.

36-60 Month FDs: Maximum Rates for True Patient Savers

Ultra-long tenures only make sense for money you're absolutely certain you won't need. Retirement nest eggs you're building five years out. Education funds for children still in primary school. Inheritance money you're preserving for the long term.

The rate increase from 36 to 60 months is often zero at many banks, as shown in the table above. You're locking your money away for two extra years with no additional return. Only commit to 60 months if you're comfortable with that reality.

One strategic use: seniors who want a predictable income can place large sums (RM500,000+) in 60-month FDs with monthly interest payouts, creating a pension-like income stream while preserving capital.

The Tenure Decision Framework

Ask yourself three questions:

• When do I genuinely need this money? Match your tenure to that date, minus a 1-2 months buffer.
• Could interest rates rise significantly? If Bank Negara is likely to raise the OPR, shorter tenures let you reinvest at higher rates sooner.
• How much extra do I earn from longer tenures? Calculate the actual RM difference. Sometimes it's not worth the extra lock-in period.

For most Malaysians, 12-month FDs offer the best risk-reward balance. You're earning near-maximum rates without betting on your financial stability three to five years out.

The Inflation Reality: What You're Actually Earning

Your FD statement shows 2.30% p.a. interest. But with Malaysia's inflation running around 2.5-3.0%, what are you really earning?

Nominal vs Real Returns

Nominal return is what the bank advertises. Real return is what you earn after accounting for inflation's erosion of your purchasing power.

Example calculation:

• Your 12-month FD: 2.30% p.a. (nominal)
• Malaysia's current inflation: 2.8% p.a.
• Real return: 2.30% - 2.8% = -0.5% p.a.

That negative 0.5% means your money grows in ringgit terms, but shrinks in what it can actually buy. The RM51,150 you receive after one year on a RM50,000 deposit has less purchasing power than your original RM50,000 did 12 months ago.

Why Long-Term FDs Still Make Sense

Even with slightly negative real returns, long-term FDs remain valuable for several reasons:

Capital preservation beats cash hoarding. Keeping RM50,000 under your mattress for 12 months means losing 2.8% to inflation with zero offsetting gains. The FD at least recovers most of that loss, leaving you only 0.5% behind instead of 2.8% behind.

PIDM protection provides peace of mind. Your principal is government-guaranteed up to RM250,000 per bank. Unit trusts or stocks might offer better real returns, but they lack that safety net.

Forced savings discipline matters. The early withdrawal penalty acts as a commitment device, preventing impulsive spending. Many Malaysians who keep money in regular savings accounts find that it gradually disappears on small purchases.

Tax-free earnings help. FD interest is tax-exempt for individuals. A RM1,150 gain from an FD is worth more than RM1,150 in dividend income (taxed above certain thresholds) or rental income (fully taxed).

When to Reconsider FDs

If inflation stays above 3.5% for extended periods while FD rates remain below 2.5%, your real returns become too negative to justify, except as emergency funds requiring PIDM protection.

In high-inflation environments, consider:

• Islamic fixed deposits with potential profit-sharing upside
• Cash management accounts offering 2.5-3.0% with better liquidity
• Conservative unit trust funds with inflation-hedging assets
• I-bonds or government securities with inflation-linked returns

Track inflation trends quarterly. If the gap between FD rates and inflation widens beyond 1.0%, your FD strategy needs adjustment.

The Compounding Advantage: Growing Your Wealth Over Time

One-year FD returns look modest. RM50,000 earning 2.30% produces RM1,150. But reinvest that profit year after year for a decade, and the compounding effect becomes meaningful.

Strategy 1: The Annual Renewal Approach

The simplest strategy is to place RM50,000 in a 12-month FD, reinvest the principal plus interest at maturity, and repeat this process annually.

Year 1: RM50,000 × 2.30% = RM51,150 (gained RM1,150)

Year 2: RM51,150 × 2.30% = RM52,326 (gained RM1,176)

Year 3: RM52,326 × 2.30% = RM53,530 (gained RM1,204)

Year 4: RM53,530 × 2.30% = RM54,761 (gained RM1,231)

Year 5: RM54,761 × 2.30% = RM56,020 (gained RM1,259)

After 5 years: RM56,020 (total profit: RM6,020)

After 10 years: RM62,650 (total profit: RM12,650)

Your RM50,000 grew by 25.3% over a decade without any additional contributions. The compounding effect added RM870 beyond simple interest calculations (which would have been RM11,500 from ten separate RM1,150 payments).

Strategy 2: The Ladder with Automatic Reinvestment

Create a staggered maturity ladder with automatic reinvestment into longer tenures.

Initial setup:

• RM10,000 in a 12-month FD at 2.30%
• RM10,000 in a 24-month FD at 2.40%
• RM10,000 in a 36-month FD at 2.45%
• RM10,000 in a 48-month FD at 2.45%
• RM10,000 in a 60-month FD at 2.45%

As each FD matures, reinvest in a new 60-month placement at maximum rates. Your average rate across the portfolio gradually increases from 2.41% initially to 2.45% once all funds are in maximum-tenure placements.

After 5 years: RM56,340 (total profit: RM6,340)

After 10 years: RM63,520 (total profit: RM13,520)

The ladder strategy earns RM870 more than the annual renewal approach over 10 years, a 6.9% improvement, because you capture higher rates on longer tenures while maintaining regular maturity access.

Strategy 3: Maximum Tenure Lock-In

The aggressive approach: lock everything in 60-month FDs immediately and hold until maturity.

First placement: RM50,000 for 60 months at 2.45% = RM56,125 at maturity

Second placement (after 5 years): RM56,125 for 60 months at 2.45% (projected)

This assumes rates remain stable. If rates rise over the decade, Strategy 1 or 2 benefits from reinvesting at higher rates, while Strategy 3 misses those opportunities.

After 5 years: RM56,125 (total profit: RM6,125)

After 10 years: RM63,005 (total profit: RM13,005)

Strategy 3 underperforms Strategy 2 because you're locked into rates during a period when they could rise. The lack of flexibility costs RM515 over a decade.

Spending vs Reinvesting the Interest

What if you spend the annual interest instead of reinvesting it?

Spending scenario: Take RM1,150 profit each year, leave RM50,000 principal in place

After 10 years: Still have RM50,000 principal, collected RM11,500 total interest

Reinvesting scenario (Strategy 1): Reinvest all interest

After 10 years: Have RM62,650, which includes RM12,650 total profit

Difference: RM1,150 extra from reinvesting, plus your capital has grown to RM62,650 instead of staying flat at RM50,000

Reinvesting clearly wins for wealth accumulation. But if you need the FD interest to supplement your monthly income (common for retirees), spending it makes sense despite the opportunity cost.

Who Should Consider Long-Term Fixed Deposits

Long-term FDs work best for money you definitely won't need in the near future. Emergency funds that you've already set aside, but want to work harder than a savings account. Wedding funds for a ceremony 18 months away. Property down payments you're building over two years.

They're also suitable for retirees seeking a predictable income, since you know exactly what you'll receive at maturity. No market volatility, no surprises. Just guaranteed returns that you can plan around.

However, if you might need sudden access to your cash, consider split placements across different maturities or look at regular savings accounts with better liquidity. Breaking an FD early usually means forfeiting all your interest earnings.

How Long-Term FDs Compare to Other Options

Long-term fixed deposits aren't your only choice for parking money safely. Regular FDs offer more flexibility with 1-3 month tenures, though at lower rates. Islamic fixed deposits follow Shariah principles and typically offer comparable rates under profit-sharing arrangements rather than interest.

Money market funds and cash management accounts sometimes offer similar returns with better liquidity, though they're not deposit products and lack PIDM protection. Unit trust funds might deliver higher returns over time, but carry market risk that FDs simply don't have.

The choice depends on your timeline and risk appetite. Need guaranteed returns with zero risk? FDs deliver. Want potential for better returns and can stomach some volatility? Consider unit trusts. Need your money available on short notice? Skip FDs entirely.

When to Break Your Long-Term FD Early (And When Not To)

Early withdrawal from long-term FDs typically means forfeiting most or all of your interest. But sometimes emergencies happen. Understanding the true cost helps you make the right choice.

The True Cost of Early Withdrawal

Place RM50,000 in a 36-month FD at 2.45% p.a., expecting RM3,675 total interest over three years. After 12 months, you face an unexpected expense and need the money.

Early withdrawal scenarios:

At Maybank (with 31 days' prior notice):

• Accrued interest for 12 months: RM1,225
• Bank pays 50% of the accrued: RM613
• You forfeit: RM2,450 of the remaining expected interest
• Total lost opportunity: RM3,062

At CIMB (without notice requirement):

• Accrued interest: RM1,225
• Bank pays: RM0
• You forfeit: RM3,675 total expected interest
• Total lost opportunity: RM3,675

That's real money disappearing because you couldn't wait another two years. For many Malaysians, RM3,000 covers three months of rent or a decent secondhand motorcycle.

When Personal Loans Are Actually Cheaper

Counterintuitive but true: sometimes borrowing money costs less than breaking your FD.

Scenario: You need RM50,000 urgently after 12 months of a 36-month FD at 2.45% p.a.

Option A (break the FD at CIMB):

• Receive RM50,000 principal, RM0 interest
• Forfeit RM3,675 expected earnings
• Net cost: -RM3,675

Option B (take a personal loan):

• Keep RM50,000 in FD, earning RM2,450 over remaining 24 months
• Borrow RM50,000 at 8% p.a. for 24 months
• Pay RM8,000 interest on the loan over 24 months
• Net: Pay RM8,000, earn RM2,450 from FD
• Net cost: -RM5,550

Alternatively, you can consider:

Option C (take a short-term personal loan to bridge the gap):

• Keep RM50,000 in FD, earning full RM3,675 over remaining 36 months
• Borrow RM50,000 at 8% p.a. for just 12 months
• Pay RM4,000 interest on a one-year loan
• Renew/restructure or pay off when FD matures in 12 months
• Net: Pay RM4,000, earn RM1,225 FD interest during loan period, then receive RM50,000 principal plus remaining RM2,450 interest
• Net cost: -RM1,550 (RM4,000 loan cost minus RM2,450 FD earnings kept)

Personal loan Option C costs RM1,550 versus RM3,675 for breaking the FD — you save RM2,125 by borrowing instead.

The Break-Even Calculator

When does it make sense to borrow rather than break your FD?

Formula: If (remaining FD interest) > (loan interest cost), keep the FD and borrow.

Example parameters:

FD remaining interest: RM2,450 (24 months left at 2.45% on RM50,000)

Personal loan cost: RM4,000 (8% p.a. for 12 months on RM50,000)

Difference: -RM1,550 (borrowing costs more)

But if you can borrow at a lower rate (6% p.a. = RM3,000 interest), or if your FD has a higher rate remaining, the math flips in favour of borrowing.

Break-even point: When loan interest ≤ FD interest forfeited

Building a Buffer to Avoid Early Withdrawal

The best strategy is never needing to break your FD in the first place.

The 3-Fund System:

• Emergency fund: 3-6 months' expenses in an instant-access savings account (0.5% interest)
• Opportunity fund: 3 months expenses in short-term FDs (3-6 month tenures at 1.95% interest)
• Long-term growth: Only place money in 12+ month FDs that you genuinely won't need

This three-tier approach means sudden expenses hit your emergency fund first, giving you time to access the opportunity fund if needed, while your long-term FDs remain untouched.

Example allocation for someone with RM100,000:

• RM30,000 emergency fund (liquid)
• RM20,000 opportunity fund (3-6 month FDs)
• RM50,000 long-term FDs (12-36 month tenures)

If a RM15,000 emergency arises, you tap the emergency fund first. If you need RM40,000, you use the emergency fund (RM30,000) plus the opportunity fund (RM10,000 from maturing FD), never touching the long-term placements.

Opening a Long-Term Fixed Deposit

Most Malaysian banks let you open fixed deposits online through their internet banking platforms or mobile apps, though some require you to visit a branch with your IC and initial deposit. Processing takes minutes if you're already a customer, or a few days if you're opening a new account.

Compare at least three banks before committing. A 0.30% rate difference might not seem significant, but on larger amounts over longer periods, it adds up. Use our fixed deposit comparison tool to see current rates across all banks and tenures in one place.

Read the terms carefully before signing. Check the early withdrawal penalties, automatic renewal conditions, and whether partial withdrawals are allowed. Some banks let you break FDs early with reduced interest; others forfeit everything.

Once locked in, your rate stays fixed regardless of whether Bank Negara Malaysia raises or lowers the Overnight Policy Rate. That certainty cuts both ways, though. If rates climb, you're stuck with your original rate until maturity.