In spite of countless investment opportunities available in India, fixed deposits continue to be the most popular investment scheme. Fixed deposits offers a steady growth for your investment with utmost safety and assurance. Once the fixed deposit tenure is completed, the bank will pay back your investment along with the interest. Apart from being a safe investment, fixed deposits also offer additional benefits such as increased rate of interests for senior citizens, and the cap on the amount of investment is also substantial. Moreover, fixed deposit schemes are also eligible for tax benefits under the Income Tax Act.
Several banks provide different types of fixed deposits with attractive interest rates. Choosing the best one from so many options can leave anyone baffled. Different banks have different Fixed Deposit features, along with varying tenures and interest rates. If you know what you are looking for, choosing the right Fixed Deposit scheme should be simple. Here are a few pointers on which you can decide the suitability of a fixed deposit:-
The tenure: The interest rates of the fixed deposits vary with its tenure. Generally, fixed deposits with a longer term have higher rates of interests. Long tenures will lock in your money with the bank, thus compromising on the liquidity options. If you are saving for short term goals, it’s better to opt for FDs with a short tenure. Fixed deposit tenures are known to vary in the range of 7 days to 10 years. It’s always better to go for banks that offer flexibility in tenure.
Interest rates & Additional benefits: Interest rates are apparently the most important things to consider while choosing a fixed deposit. Higher the interest rate greater the return. Aside from interest rates, banks also offer many additional benefits such as, loan facilities against fixed deposits for emergency financial needs. Some banks also offer auto renewal facility and overdraft facility for the purpose of high liquidity of funds.
Premature Withdrawal: Before taking up a fixed deposit with a bank, it is a wise move to check the premature withdrawal terms and conditions of the FD schemes. Most of the banks put up the FD premature withdrawal clause on their respective websites online. However, there a few banks that don’t charge any penalty rates on premature withdrawal of fixed deposits, thus giving you an easy option for liquidity.
Online fixed deposits: Fixed deposits online are an easy and convenient way to invest. With an online fixed deposit account, you can seamlessly transfer funds from your savings account to the fixed deposit account.