Fixed deposits are an excellent investment option with a higher rate of interest in comparison to other deposits. The amount deposited is safe and stable. Many banks offer fixed deposits at the flexible tenure of 7 days to 10 years.
The interest rate offered on fixed deposits depends on some factors viz. tenure of deposit, age of investor policy of the bank, investment amount, economic conditions etc.
Fixed deposits are great saving and investment options and many banks and financial institutions offer services like tax saver FD, loan against FD, sweep in deposit facility among others. Thus, it can be concluded that fixed deposits offer higher returns, stability and safety of invested money and high flexibility.
Why Choose Fixed Deposit?
Fixed deposits come with a plethora of benefits which makes them ideal as an investment option. Some main reasons on why one should opt for fixed deposits are:
Guaranteed Returns on Investment –
Fixed deposits offer guaranteed returns in terms of interest rates. The banks pay the interest at the rate applicable at the time of investment on the fixed deposit. The invested money is safe and secure for the term of the deposit.
Flexible Deposit Tenure Options –
Banks offer flexible tenures for fixed deposits. The customers can choose to get the fixed deposit done in the range of 7 days to 10 years. On account of the tenure, the rate of interest also changes. Tax saving FDs have a lock-in period of a minimum of 5 years.
Investment Amount –
The investment amount for fixed deposits varies from bank to bank. However, some banks allow for fixed deposits of as low as Rs. 100 with no upper limit on the amount which can be booked as fixed deposits. The maximum limit for tax saving FDs is Rs. 1.5 lakh per annum.
Higher Returns –
The rate of interest offered on fixed deposits are higher than those on the savings account. It ranges between 3.5- 9% annually and varies from bank to bank, deposit tenure, age of investor etc.
Calculate FD Returns –
With the help of Fixed Deposit Calculator, it is easy to calculate the returns on the fixed deposits by using the Principal amount, FD interest rates and tenure.
Loan against Fixed Deposit –
Customers can also avail the facility of taking a loan against the fixed deposits. The rate of interest charged is usually 1-2% more than the rate of interest on fixed deposit. This comes handy in times of financial emergency wherein you get the money without maturing your fixed deposit. Being a secured loan, the rate of interest offered is usually lower than other secured loans. The customers can get the loan amounting to 90% of the FD amount.
Credit Card against Fixed Deposit –
Customers can also avail the facility of credit card secured against the fixed deposit. Being secured in nature, the banks and financial institutions do not consider your credit history. It is a great way to improve one’s credit score by using the card responsibly and making the payments of credit card bills on time.
Premature or partial withdrawal –
By paying a premature withdrawal penalty, the customers can choose to withdraw either partial or full amount deposited before the maturity. The interest rate on the premature withdrawal of FD is lower than the current offered rate and card rate.
DOCUMENTS REQUIRED TO OPEN FIXED DEPOSIT ACCOUNT
Banks and financial institutions usually ask for basic KYC documents. The list of documents is as follows:
Identity Proof Documents: One can choose to submit any of the following documents like identity proof.
- Aadhaar Card
- PAN Card
- Voter ID card
- Driving Licence
- Address Proof: One can choose to submit any of the following documents as address proof.
- Telephone bill
- Electricity bill
- Bank Statement with Cheque
- Aadhaar card
- Certificate/ ID card issued by Post office
Types of Fixed Deposit
There are two types of fixed deposits viz.
- Cumulative Fixed Deposit
- Non-Cumulative Fixed Deposit
What is a Cumulative Deposit Scheme?
The Cumulative fixed deposit is one wherein the interest on the FD is compounded quarterly, half-yearly or yearly and added to the principal amount and paid to the investor at the end of the deposit tenure.
What is the Non-Cumulative Scheme?
In Non-Cumulative Fixed Deposit Scheme, the investors can avail to get the interest on the FD either monthly, quarterly, half-yearly or yearly. This acts as a good option for people who want an additional source of income. This allows them to have some returns at regular intervals.
Thus, fixed deposits are a great way to save and grow money safely and securely. With the high flexibility and good returns, it is the most sought after option for investors. Using the LoansJagat platform, one can use fixed deposits to attain a loan anytime and from anywhere.