The Buyt Desk
Fixed deposit is one of the safest investment options for those who refrain from risks. In a fixed deposit, the individual basically locks an amount for a set period and earns interest on the principal amount throughout the tenure on a cumulative basis. Banks offer different types of fixed deposits. Depending on the FD types, its interest rate and other benefits vary. The procedure to open a fixed deposit is simple. An individual can open it in any bank regardless of, he has an account in that bank or not. However, with banks, if you don’t have a savings account, you must complete the KYC.
Different Types Of Fixed Deposits
Regular Fixed Deposit – The features of regular fixed deposits are
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The investor deposits the amount for a fixed tenure.
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The tenure of the deposit could be between 7 days to 10 years.
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The interest rate of this account is higher than the savings account.
Tax-Saving Fixed Deposit – The fixed deposit gives tax-saving benefits along with an opportunity to earn interest.
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Tax exemption on the principal deposit amount in a calendar year is 1.5 Lakhs.
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It has a lock-in period of five years. One cannot withdraw an amount during this period.
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Allow deposit of one time lump sum amount.
Senior Citizen Fixed Deposit – This fixed deposit product is available only for senior citizens, i.e. people above 60 years of age. The features of this product are:
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It comes with flexible tenure.
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Senior citizens get a special rate of interest on the same.
Cumulative Fixed Deposit – This is a kind of FD in which you deposit an amount in the account every month for a set time. In this FD you will get the earned interest upon the account maturity. The tenor of this fixed deposit ranges from 12 months to 60 months.
Non-Cumulative Fixed Deposit – In a non-cumulative fixed deposit, the bank or any other financial institution pays an interest rate at a regular interval of time. The investor can choose the frequency of payment according to his/her convenience. It can be monthly, half-yearly and yearly. Here also, the tenure of FD ranges from 12 months to 60 months.
NRI Fixed Deposit – It is one of the safest investment options for NRIs. It provides a higher interest rate in comparison to the regular FD. The tenor of this FD ranges from 12 months to 60 months. It also gives the option of multi-deposit and easy renewal. NRI can deposit in this account via NRO account, overseas citizens of India can deposit in it via OCI and People of Indian Origin via PIO.
Company Deposit – This is offered by companies or NBFC’s and not by banks. It comes with a higher interest rate than the different types of the fixed deposit we have already discussed. However, before investing in this FD, you must do a thorough background check of the company and check its authenticity. There have been several scams in India where a high interest was offered and later investors were duped.
Bank Fixed Deposit – These are FDs banks offer to customers who have a savings account in the same bank. Some banks provide additional features like an insurance benefit of Rs 5 Lakh. However, their interest rate remains lower than other FD options.
