Savings accounts, fixed deposits and cash management accounts allow us to earn attractive interest rates on our savings, while retaining a high level of liquidity if we want to withdraw our cash.
In the high interest rate environment in recent years, we were able to earn over 4% p.a. without taking on much risk. The risk-free rate in Singapore, taken from the 6-month Government T-bills, rose from 0.49% to 4.36% between January to December 2022.
While interest rate have tapered slowly to about 2.65% today, it remains as relevant as ever. Since the US Reciprocal Tariffs were announced on 3 April 2025, the S&P 500 Index lost over 10% – shedding nearly US$5 trillion in just two days. While investments may have crashed, our savings remained unscathed in our high interest savings accounts, fixed deposits and cash managements accounts.
With rising interest (pun intended) in low-risk and decent-interest rate instruments, it might pay to understand the difference in risk and protection levels these instruments provide.
Read Also: Best Savings Accounts In Singapore – If You Don’t Want To Keep Jumping Through Hoops
What Type Of Account We Are Putting Our Cash In
Perhaps the biggest difference between the 3 liquid instruments is the type of accounts that they are. A high interest rate savings account is deposit account offered by an MAS-regulated bank or finance company. This means that we can withdraw our savings from the ATM on-demand, as well as enjoy protection of up to $100,000 per depositor per bank by SDIC.
While fixed deposits are also held by MAS-regulated banks or finance companies and enjoy the same $100,000 per depositor per bank protection by SDIC, it is slightly less liquid. This means that we cannot make on-demand withdrawals at ATMs.
Cash management accounts may be offered by various financial institutions, including banks and finance companies as well as fintech platforms, such as robo-advisors and online brokerages. They are not considered deposits but rather, are low- to moderate risk investments – and that’s why we do not enjoy any insurance coverage by SDIC. To access our cash, we need to sell off the investment and transfer the proceeds to our savings account.
Read Also: Complete Guide To Cash Management Accounts In Singapore [2025 Edition]
How We Earn Interest Rates
On many high interest rate savings accounts, we unlock higher interest rates by making eligible transactions. At its base, high interest rate savings accounts tend to require us to credit our salary and save a minimum amount with them. We can usually earn higher interest rates by paying with an eligible credit card, investing in eligible products and buying eligible insurance policies.
All this means that the interest rates are not fixed each month, but can change based on our eligible transactions each month. Moreover, we are not assured of the interest rates for any period of time, as the banks can always announce lower interest rates at any time. Recently, we have seen the OCBC 360 and UOB One accounts announcing lower their interest rates from 1 May 2025.
With fixed deposits, as its name suggests, we earn a fixed interest rate for a certain period of time. Banks may offer fixed deposits ranging from 1-month to up to 60-month long tenures. Fixed deposit rates may change more frequently, and unlike changes to interest rates of high interest rate savings accounts, typically do not make national news as they tend to track market rates more closely.
While fixed deposits are locked-up for a period of time, we can always “break” the fixed deposit – and forfeit the interest rates.
Cash management accounts are not deposits, but investments into money market funds and short-term bonds instead. This means that while products may be broadly referred to as cash management accounts, they can differ by a great deal – usually because of its underlying investments.
For example, fintech platform, Endowus has a cash management product called Cash Smart. Under Cash Smart, there are 3 different risk levels that we can choose from: Cash Smart Secure; Cash Smart Enhanced; and Cash Smart Ultra.
Source: Endowus
As we can see in the screengrab above, the cash management accounts have different underlying products – which is why it carries level levels of risk and hence, offer different rates of returns. The higher the risk we take, the higher the projected return we can expect.
Endowus also clearly depicts the Historical max loss very transparently, and again, we can see that its safest Cash Smart Secure only suffered a historical max loss of 0.05%, while its riskiest Cash Smart Ultra has suffered a max historical loss of 3.14%. No surprises again, as the higher the risk, the higher the max historical loss.
As an investment, we can also expect to pay a fee when investing in cash management accounts. When we invest with banks, robo-advisories, and other fintech platforms, we can expect to pay a fee to the platform as well as an underlying fund-level fees. Endowus clearly displays the Endowus Fee that they charge, along with the Fund-level fees.
Furthermore, we can even choose to invest in various money market funds and short-term bond funds individually, either via Endowus itself (via its Fund Smart solution) or through a brokerage, such as IBKR – where we can invest in Money Market ETFs and Short-Term Bond ETFs.
Finally, if we ever see a cash management account offering a guaranteed return, we should start asking more question rather than blindly believe in it. That’s because investments always carry some risk. Even if such guarantees exist, they may only be as good as the entity that is guaranteeing them. For instance, enjoying SDIC protection over our cash deposits is very different from enjoying a guarantee from a fintech entity.
Read Also: Why Guaranteed Returns On Your Investments Isn’t Always Guaranteed
| High Interest Savings Account | Fixed Deposit | Cash Management Account | |
| Type of Account | Bank deposit | Bank deposit | Robo-advisory or Fintech platform investing in Money Market Funds and/or Short-Term Bonds |
| – SDIC protection | Yes – up to $100,000 per depositor per bank | Yes – up to $100,000 per depositor per bank | No |
| – Liquidity | On-demand online banking transfers and ATM withdrawal | Can “break” fixed deposit on-demand, but potentially lose interest | Can sell product, wait for funds to be credited, and transfer to savings account |
| How We Earn Interest Rates | Can change each month, based on eligible transactions | Fixed interest rate return | Based on market return on underlying funds |
| – Risk | Virtually risk-free | Virtually risk-free | Low to Moderate risk |
| – Tenure | Can be increased or decreased by the bank at any time, usually following interest rate environment | Fixed Tenure chosen when we opened the Fixed Deposit | No fixed tenure |
| – Management Fee | No fees | No fees | Usually charge a small fee; there will also be underlying fund-level fees |
Read Also: Beginners’ Guide To Best Fixed Deposits In Singapore
The post Savings Account VS Fixed Deposit VS Cash Management Account: Why You Need To Understand The Differences Before Putting Your Cash In Them appeared first on DollarsAndSense.sg.
