There are several ways to save money for the future. Some of them are PPF, EPFO, RD, FD, and other investments. When comparing different ways of saving, FDs or fixed deposits are considered the best and risk-free way to save for the future.
Investing in fixed deposits is a great way to save money today and save it for the future. Banks and financial institutions both offer competitive interest rates on deposits, which are credited along with the principal amount upon maturity of the FD. In addition, some banks allow you to withdraw part of your FD account balance or the entire balance before maturity. However, the consumer must pay a fine if the amount is withdrawn prematurely.
Furthermore, the bank allows customers to open fixed deposit accounts with a minimum deposit for a certain period of time. In this blog, we will learn more about fixed deposit accounts and their benefits.
Fixed Deposit Account Overview
Below, what distinguishes fixed deposits from other financial instruments is savings.
|Fixed Deposit||One of many types of investment options
Customers are required to deposit a fixed amount for a predetermined period of time
The principal amount along with the accrued interest is credited to the customer’s account upon maturity
Early withdrawal is allowed, but a penalty must be paid
Compound interest is paid if the amount of FD is reinvested after maturity
|Who offers FD?||Bank
|How to open FD||On line
|FD type||Senior Citizen FD
FD Tax Saving
Fixed Deposit Flexi
Fixed Deposit Cumulative
Non Cumulative Fixed Deposit
|Early withdrawal||Allowed, but penalty must be paid|
|How to calculate FD||Use the online FD calculator|
|Interest rate||Interest rates differ from bank to bank|
What are the Benefits of Fixed Deposits?
The benefits of fixed deposits are numerous, some of which are listed below-
- Safe investment choice– FD is considered as one of the safest investment options available in the market when compared to other investment options. Throughout a predetermined tenor, this investment instrument provides a fixed interest rate that does not fluctuate with market conditions.
- Guaranteed interest rate– FD users receive a fixed rate of interest on the amount deposited. A fixed deposit interest calculator is available on the bank’s website, allowing users to calculate the amount of interest they will receive on maturity.
- Hassle-free investment– With a savings account, you can easily invest in fixed deposits by going to a bank branch or investing online. Once the FD matures, the amount can be updated or credited to the account.
- Compound interest available– Customers can reinvest the amount of FD that has matured for the duration of their choice. In this context, compound interest means that you will earn interest not only on the principal amount but also the interest earned.
- Ease of reinvestment– When the fixed deposit account matures, the customer can direct the bank to credit the amount or reinvest the amount for another predetermined period of time.
- Flexible term– Banks allow customers to choose the duration of their fixed deposits. There are several banks that offer maturities ranging from 7 days to 10 years.
- Tax saving benefits– A large number of banks in India provide their customers with tax-effective fixed deposit options, lowering the taxable amount payable. It is recommended that you contact your bank for a detailed description of the benefits of FD tax savings.
- Loans against FD– Instead of taking out an unsecured loan and paying a higher interest rate, a person can use a fixed deposit amount to finance himself.
Is it possible to receive FD interest every month?
The customer is offered interest based on the agreed terms. During the process of opening an FD account, customers can choose between monthly, quarterly and annual interest.
Should I invest in fixed deposits?
Fixed deposits, such as Paytm Payment Bank FD, are considered the best and safest investment option to build good savings for the future. As an added and unique benefit to its customers, Paytm Bank offers competitive interest rates and no penalties for early withdrawals.
What is the minimum amount that should be deposited in a fixed deposit account?
The minimum amount to be kept in a fixed deposit account varies from bank to bank.
Can I add 1 lakh rupees to my fixed deposit account?
The amount that can be deposited into a fixed deposit account is determined by banking policy.
How much does it take to create a Paytm Payment bank FD?
It takes less than a minute to set up a Paytm account.