9 Important Things to Know before Opening an FD Account

It is one of the most preferred forms of investments as it is compared to be safer than equities. Moreover, the returns are also known before investing the money, unlike equities.  Because the money is invested for a pre-determined duration, fixed deposits are also called as ‘term deposits’.

It is a perfect investment option for investors who want to avert the risk and also helps in fulfilling your long-term financial goals- such as securing your child’s future, higher education, marriage, and other major unexpected expenses that may arise in future.

Here are certain things that you must know before investing in an FD account:

Opening an FD account

It is quite simple to open your fixed deposit account with the same bank with which you have your savings account. Some banks also allow you to open a fixed deposit account even if you do not have a savings account with the bank. You just need to go through a simple Know-Your-Customer (KYC) process to open a bank FD account without a savings account.

Here is what the KYC process looks like:

• Provide self-attested Xerox of ID proof such as your PAN Card, your Voter ID Card, Aadhar Card, and Passport, etc.

• Colored passport size photos

• Original documents also need to be furnished during the verification

Minimum Deposit Amount

Every bank has different minimum and maximum deposit limits. It is suggested to check with the bank before opening an FD account.

For example, at the minimum limit for SBI Fixed deposits is Rs. 1000 and there is no maximum limit. However, the minimum limit for ICICI FDs for minors is Rs. 2000 and for General Citizens it is Rs. 10,000.

Tenure:

As fixed deposits are done for specified time duration, it is important to check the tenure carefully. You can choose a period between 1 year and 10 years as per your requirement. There are FDs for a period of 7 days also. And premature closure/withdrawal of a fixed deposit would call for a penalty that will reduce your total FD interest/deposit rate.

So, the minimum and maximum tenure of a fixed deposit generally varies from one bank to another. Depending on your financial goals and financial requirement, you can select the tenure of your FD and invest accordingly.

Fixed Deposit Rates and Payouts

The interest rate offered on the FD will depend on the period for which you are investing in the FD and also vary from bank to bank for FDs for the same tenure. The FD interest rate on Senior citizens’ FDs is higher than the General FD interest rates. For instance, SBI fixed deposit rates will vary from ICICI FD rates for the same duration of Fixed Deposit.
There are two types of payouts in fixed deposit schemes -cumulative and non-cumulative. Depending on your requirement you can choose any of them. So, you can opt for non-cumulative fixed deposit if you are looking for a regular source of income on a monthly/quarterly/half yearly/annual basis.

Or you can choose the cumulative one if you are looking to save for a long-term and get returns on maturity on both the principal and the accumulated interest. In this case, the total interest amount that is accrued is re-invested and is paid to you along with the principal amount at the time of maturity.

On the other hand, if you invest in a non-cumulative FD, the interest will get credited into your account at the pay-out interval that you have opted for. You can choose the payout on monthly/quarterly/half-yearly and on an annual basis as offered by your bank.

Tax Exemption Benefits on FDS

The interest that you receive on your FD is fully taxable as per your Income Tax slabs. The bank will deduct the TDS if the interest earned in a financial year is more than Rs. 10,000, as per the Income tax laws. To ensure that your TDS is not deducted you can submit your Form 15G or Form 15H to your bank.

Premature Withdrawals

In case of any financial emergency, you can withdraw your FD before the maturity date; however, the bank may levy a penalty on premature withdrawals. However, the penalty amount differs from one bank to another.

It is advisable to check the rules pertaining to pre-mature withdrawals while opening your FD account.

There are some banks that offer a premature withdrawal facility without a penalty.

Loan Facility against Fixed Deposits

Your fixed deposit can be used as collateral to get a loan. The maximum loan amount can be a certain percentage of the principal amount that is deposited. However, this percentage can vary from one bank to another.

Nomination Facility against Fixed Deposits

If you are the sole depositor it is better to make someone a nominee.  In case of the death of the FD Account holder, the nominee can claim the maturity amount along with the interest earned.

Automatic Renewals

Most of the banks renew the FD automatically every year until the maturity date (until specific instructions are given).  You can choose for an automatic renewal of your FD or opt out of it and mention it in the FD form. In case you forget to mention it, you can visit your bank branch and ask them to credit the amount in your bank savings account.

Nowadays, both private and public sector banks allow you to open an FD account online through mobile banking or internet banking app. You don’t need to visit the branch physically and get your FD account opened in few minutes.

Bottom-line

So, if you have a fixed deposit account or are planning to open one, you can refer to the above guidelines for the same. These 8 tips will ensure that your FD account serves the purpose you opened it for – be it your long-term financial goals or to create savings.

Bank FD Interest Rates

Bank FD Calculator

NRI-NRE FD Rates

Allahabad Bank FD Rates

Andhara Bank FD Rates

Assam Gramin Vikash Bank FD Rates

AU Small Finance Bank FD Rates

Axis Bank FD Rates

Bajaj Finance FD Rates

Bandhan Bank FD Rates

Bangiya Gramin Vikash Bank FD Rates

Bank of Baroda FD Rates

Bank of Ceylon FD Rates

Bank of Maharashtra FD Rates

Baroda Gujarat Gramin Bank FD Interest Rates

BOI FD Interest Rates

Canara Bank FD Rates

Capital Small Finance Bank FD Rates

Central Bank of India FD Rates

Citi Bank FD Rates

City Union Bank FD Rates

Corporation Bank FD Rates

Dakshin Bihar Gramin Bank FD Rates

DBS Bank FD Rates

Dena Bank FD Rates

Dhanlaxmi Bank FD Rates

Equitas Bank FD Rates

ESAF Small Finance Bank FD Rates

HDFC FD Interest Rates

HSBC FD Rates

ICICI Bank FD Rates

IDBI Bank FD Rates

IDFC Bank FD Rates

Indian Bank FD Rates

Indian Overseas Bank FD Rates

IndusInd Bank FD Rates

Jana Small Finance Bank FD Rates

Karnataka Bank FD Rates

Kerala Bank FD Interest Rates

Kotak FD Rates

Lakshmi Vilas Bank FD Rates

Muthoot Capital FD Rates

Nainital Bank FD Rates

Odisha Gramya Bank FD Rates

Paschim Banga Bank FD Rates

Paytm FD Rates

PNB FD Interest Rates

Prathama UP Gramin Bank FD Rates

RBL Bank FD Rates

Saurashtra Gramin Bank FD Interest Rates

SBI FD Interest Rates

Shriram Finance FD Rates

State Bank of Hyderabad FD Rates

State Bank of Mysore FD Rates

State Bank of Travancore FD Rates

Syndicate Bank FD Rates

Tamil Nadu Grama Bank FD Interest Rates

Telangana Grameena Bank FD Rates

Tripura Gramin Bank FD Interest Rates

UCO Bank FD Rates

ujjivan small finance bank fd rates

Union Bank FD Rates

Uttar Bihar Gramin Bank FD Rates

Uttarakhand Gramin Bank FD Interest Rates

Vijaya Bank FD Rates

Yes Bank FD Rates

Expand

Allahabad Bank FD Calculator

Andhra Bank FD Calculator

AU Bank FD Calculator

Axis Bank FD Calculator

Bajaj Finance FD Calculator

Bandhan Bank FD Calculator

Bank of Baroda FD Calculator

Bank of India FD Calculator

Bank of Maharashtra FD Calculator

Canara Bank FD Calculator

Central Bank FD Calculator

Corporation Bank FD Calculator

Equitas Small Finance Bank FD Calculator

HDFC Bank FD Calculator

ICICI Bank FD Calculator

IDBI Bank FD Calculator

IDFC Bank FD Calculator

Indian Bank FD Calculator

Indian Overseas Bank FD Calculator

IndusInd Bank FD Calculator

Karnataka Bank FD Calculator

Karur Vysya Bank FD Calculator

Kotak Bank FD Calculator

Mahindra Finance FD Calculator

OBC Bank FD Calculator

Odisha Gramya Bank FD Calculator

PNB Bank FD Calculator

SBI FD Calculator

Shriram Finance FD Calculator

Syndicate Bank FD Calculator

Tripura Gramin Bank FD Calculator

UCO Bank FD Calculator

Union Bank FD Calculator

Yes Bank FD Calculator

Expand

HDFC NRE FD Rates

Maybank Malaysia FD Rates

SBI NRI FD Rates

Axis NRI FD Rates

Maybank Singapore FD Rates

Yes Bank NRI FD Rates