{"id":17579,"date":"2021-11-01T20:00:00","date_gmt":"2021-11-01T12:00:00","guid":{"rendered":"https:\/\/www.comparehero.my\/blog\/uncategorized\/how-savings-accounts-work.html"},"modified":"2026-03-26T16:00:30","modified_gmt":"2026-03-26T08:00:30","slug":"how-savings-accounts-work","status":"publish","type":"post","link":"https:\/\/www.comparehero.my\/blog\/savings-accounts\/how-savings-accounts-work.html","title":{"rendered":"11 Things You Should Know About Your Savings Account"},"content":{"rendered":"\n

Savings accounts are one of the most commonly used bank accounts in Malaysia. Even though this product category is relatively straightforward, there are still some things you might not know about savings accounts. To help you out, we have written a short guide to familiarise you with the ins and outs of savings accounts in Malaysia. \n <\/p> \n

What is a saving account? <\/strong><\/h2> \n

A savings account is a bank account that you can use to generate interest on your money. It is one of the safest forms of investment, but also has a significantly lower interest rate than, for example, fixed deposit accounts. A savings account allows you to freely deposit and withdraw money whenever you choose without penalties.<\/p> \n

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1. How do saving accounts work in Malaysia? <\/strong><\/h2> \n

You can apply for different saving accounts through the website of the banks listed. The bank will open the account for you and this account will have a predetermined interest rate. Some banks have a tier system<\/a>, where they offer different interest rates depending on the size of the deposit. Savings accounts are generally meant to give you a small incentive for keeping your money at the bank. The interest rate is not high enough to make it a serious investment option.<\/p> \n

2. Does a savings account generate interest?<\/strong><\/h2> \n

Yes, savings accounts generate interest on your deposit. If you have a savings account with an annual interest rate of 1% and you deposit RM 5,000 at the start of the year, you will receive RM 50 in interest at the end of the year, assuming you did not withdraw or change your RM 50,000 deposit for the entire year.<\/p> \n

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3. What is the average interest rate for savings accounts in Malaysia?<\/strong><\/h2> \n

As of October 2021, interest rates for savings accounts in Malaysia range from 2-4%, which is a result of a comparison of 65+ savings accounts across all major banks in Malaysia.<\/p> \n

4. Are your deposits safe with a savings account?<\/strong><\/h2> \n

Yes, your deposits are very safe in a savings account. Most banks in Malaysia are a member of Perbadanan Insurans Deposit Malaysia (PIDM)<\/a>, which is an insurer that automatically insures depositors against closures of the bank, up to deposits of RM 250,000. That means that if the bank closes, the PIDM will give you a full refund on your deposits. However, the chance that major banks in Malaysia will fail is very small. The last big failure in the Malaysian banking world happened during the Asian Financial Crisis in 1997 and even then, most of them were recapitalized by Bank Negara. All in all, you can be fairly sure that nothing will happen to your savings deposits.<\/p> \n

Related<\/strong>: Transferred Money To The Wrong Bank Account? Here\u2019s What You Should Do<\/a><\/p> \n

5. How to find the savings accounts with the best interest rates?<\/strong><\/h2> \n

You can use the lists in this article to find the savings accounts with the best interest rates in Malaysia. Depending on your personal finance situation and your credit rating you might be given a different interest rate. Also, your interest rate might differ based on the size of your deposit.<\/p> \n

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6. Can you freely deposit and withdraw money in your savings account?<\/strong><\/h2> \n

Yes, a savings account allows you to freely withdraw and deposit your money. However, if you do intend to generate interest on your savings through a savings account it is not recommended to withdraw and deposit your money. That being said, a fixed deposit might be a better choice in that case.<\/p> \n

7. What is the difference between a current account and a savings account?<\/strong><\/h2> \n

The main difference between a current and a savings account is that a current account does not give you interest on your deposits while a savings account does. Secondly, a current account is more easily accessible than a savings account, which matches with how these accounts are meant to be used. You would use your current account for day-to-day and small deposits and withdrawals, while you use your savings account to accumulate interest on excess money, with less frequent deposits and withdrawals.<\/p> \n

Related<\/strong>: You Can Have 4 Types of Bank Accounts in Malaysia, But What\u2019s Right For You?<\/a><\/p> \n

8. How do I open a savings account?<\/strong><\/h2> \n

With most banks, you can open a savings account online. If you are applying for a savings account with a higher interest rate, you might have to go to the branch yourself to finish the application, but generally, the application process is not as rigorous as for example a credit card application.<\/p> \n

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9. Which types of savings accounts are there?<\/strong><\/h2> \n

Savings accounts in Malaysia can generally be categorised into six categories:<\/p> \n