A fixed deposit is considered one of the safest investment options by Indians. The reason for the same in return for a fixed amount after a certain period. Moreover, it offers a comparatively more interest rate than a normal savings account. So, what exactly is a fixed deposit?Read more
Save upto ₹46,800 in tax under Sec 80C
Inbuilt Life Cover
Tax Free Returns Unlike FD
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Fixed deposits are also known as term deposits. They are a type of investment that lets you gain interest by depositing an amount for a fixed tenure. The rate of interest on FDs is predefined and fixed, but it depends on tenure. For example, SBI FD rates for the general public for a tenure of one year is 4.90%. For senior citizens, for the same tenure, SBI FD rates are 5.50%.
Generally, the fixed deposits have a lock-in period and as an investor of FD, you cannot withdraw money from it before completing this period. If for any reason, you have to withdraw money before the completion of the lock-in period, you have to pay a penalty on the rate of interest.
There are different types of fixed deposit options provided by Indian banks. The common types of fixed deposits are:
Almost all Indian banks offer this type of fixed deposit option to their customers. With a standard fixed deposit, you can invest your money for a fixed term and it offers you a fixed rate of interest that generally depends on the tenure of the deposit. Common features of Standard Fixed Deposit are:
Tax-Saving Fixed Deposit is different than Standard Fixed Deposits in a way that you cannot invest your money in it for less than five years. The amount you invest in this type of FD is eligible for tax exemption U/S 80C of the Income Tax Act. However, the interest earned from this fixed deposit is eligible for tax. The features of this fixed deposit are:
These fixed deposits are termed as ‘special’ as they are provided for a special or specific period. This special tenure can be anything such as 390 days or 290 days, etc. The rate of interest offered by these special fixed deposits is higher. This is the reason they are a popular choice among investors. The features of these fixed deposits are:
In cumulative fixed deposits, the interest is provided with the invested amount upon maturity of the FD. The features of this fixed deposit are as follows:
The features of non-cumulative fixed deposit are as follows:
This fixed deposit is for senior citizens or for those who are more than 60 years old. The features of this fixed deposit are:
These fixed deposits are linked to your savings account. The basic features of this FD variant are:
Which bank is the best for fixed deposit? Or what is the suitable type of fixed deposit for me? If these are some of your concerns, then do not worry as we are here discussing the points that you must consider before finalizing a fixed deposit. Keeping these points in your mind, you can choose a suitable fixed deposit:
Despite the countless options of investments available in India, people prefer fixed deposits. The reasons for the popularity of fixed deposits are safety, security, and steady growth of your invested amount. Upon completion of the tenure of FD, the bank pays back the invested amount along with interest. The different types of fixed deposits offered by banks allow you to opt for a suitable FD option.