Everything You Need To Know About Fixed Deposits

By | December 8, 2017

From stock markets to real estate to mutual funds, there are many ways to multiply your savings. Here, we will discuss Fixed Deposits, one of the most traditional methods of saving.

Everything You Need To Know About Fixed Deposits

Everybody loves money, don’t you agree? While a lucky few turn into millionaires overnight, others opt for more conventional ways, such as saving and investing money.

In ancient times, the ways to save your hard-earned money were few but not anymore. These days we have a plethora of avenues not just to save but also to build on your savings. From stock markets to real estate to Mutual Funds, there are many ways to multiply your savings. Here, we will discuss Fixed Deposits, one of the more traditional methods of saving. Use this article as a guide to make a well-informed decision.

What is a Fixed Deposit?

A Fixed Deposit is a savings scheme where you deposit a principal amount for a fixed tenure with high-interest rates. Once the Fixed Deposit attains maturity, you will enjoy the principal amount along with the interest earned on it over the tenure.

Why choose Fixed Deposits?

  • A Fixed Deposit is the safest form of investment as you get guaranteed returns once the tenure is over. For example, one can invest in stock market or real estate but there is a risk of losing money in case the stock market crashes or there is a depreciation in property value. In the case of Fixed Deposits, the risk is minimal as one will get sure shot returns. That is, the principal amount deposited plus interest on a monthly, quarterly or annual basis.
  • A Fixed Deposit yields higher interest rates compared to a normal savings account. Since you are depositing your savings for a fixed period of time, banks offer higher interest rates on Fixed Deposits.
  • When you face a cash crunch, Fixed Deposits can come to your rescue. Instead of applying for a Personal Loan to deal with the financial emergencies, you can opt for a loan against your Fixed Deposit. This facility grants you a loan of up to 90% of the Fixed Deposit amount. What’s more, the interest rate on a loan against a fixed deposit is lower compared to Personal Loans!
  • One of the advantages of FDs is its flexibility. You can deposit any amount of your choice for a tenure ranging from 7 days to 10 years. This helps you plan your savings for the future. Unlike real estate, where you need to invest heavily, you can start investing in a Fixed Deposit with an amount as low as Rs. 1,000. And when in urgent need of money, you can even break the FD and withdraw money before maturity.
  •  A Fixed Deposit helps cultivate the habit of saving. In order to enjoy the full benefits of the savings scheme, the deposited amount must not be withdrawn before it attains maturity.

Additional Reading: Bank Fixed Deposit Rates

Wondering how the calculations work? Well, we have simplified it for you with our Fixed Deposit Calculator.  Go on and try it out. And if you’d like to open a Fixed Deposit account, go ahead and click on the button below.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

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