Fixed deposit has always remained the most popular pick among hundreds of investment schemes that exist in India. Banks pay you back the amount deposited along with a decent amount of interest at the end of the chosen term. You also get to avail special benefits like best FD rates of interest for senior citizens.
Let’s get to know more about this savings plan.
Types of Fixed Deposits
Here are the different types of FDs that you can choose from.
The fixed deposits are basically term deposits having a preset tenure. You deposit a particular amount for a specific tenure and accrue standard interest rate on that fixed sum. It is one of the most convenient investment plans offering best FD rates and no complexities or market risks.
These sorts of deposits are for longer tenure and you cannot withdraw the amount prior to the date of maturity. So, it has a lock-in period and the interest gets accumulated to the invested amount till the last day of tenure. You get to claim tax exemption on this type of investment up to 1.5 lakhs.
FD for regular income
If you want to make yourfixed deposit account a source of your regular income, you can choose to take away the interest ensued on the deposited amount on a monthly or quarterly basis. With your FD A/C will be linked the savings account where the interest will be sent on a particular date. This is a great way to manage your monthly expenses.
If you are not using the interest monthly or quarterly, you can opt for adding the accumulated interest to the deposited amount so that the next interest cycle has its effect on the new increased amount. This way compound interest is calculated on the FD and you earn more on the primary investment.
Advantages you get
This easy deposit scheme comes with a lot of benefits that make you feel privileged. Let’s find out what they are.
FDs provide ‘guaranteed’ returns on the principal amount invested. That is why, compared to the other sorts of investment plans, Fixed Deposits are safer and more suitable for all. It comes with zero risk factor.
Higher rate of interest
You may think that savings accounts or recurring deposit accounts are also as beneficial as FDs, but to speak the truth, FD accounts give you higher interest than those two. Hence, choose FD. The more the merrier!
Liquidity and flexibility
You can withdraw the amount amassed in the FD account as and when required, certainly by paying a penalty charge, if taken prematurely. You also enjoy flexible tenure that ranges from 7 days to 10 years. Banks don’t impose compulsion. Select as per your needs.
Fixed deposit accounts are the safest options for keeping your hard-earned money protected. Moreover, the fear of penalty charges holds you back from premature withdrawal, resulting in effective savings. By investing in FDs, you can surely make a wise financial move and secure your family’s future.