Last Update: March 16, 2023, 08:27 IST
Studies have shown that people are generally happier because they earn more.
Fixed Deposits are offered for a wide range of tenures ranging from short tenures of 7 to 14 days to extended tenures of 10 years.
Fixed Deposits are offered for a wide range of tenures ranging from short tenures of 7 to 14 days to extended tenures of 10 years.
Fixed deposits are the most preferred savings instrument for many investors as they are comparatively safe and offer a relatively higher rate of interest than a savings account. As the name indicates, Fixed Deposits come with a fixed tenure. You will have to wait till the completion of the stipulated tenure to get all the benefits of the fixed deposit scheme.
Investors can avail fixed deposits from any bank or non-banking financial company. Fixed deposits offer returns at a pre-determined rate of interest and you can withdraw the principal amount along with the accrued interest after the maturity period. Investors can choose different time periods, short term or long term, for fixed deposits depending on their financial goals and portfolio.
Fixed Deposits are offered for a wide range of tenures ranging from short tenures of 7 to 14 days to extended tenures of 10 years. The longer the FD tenure, the higher the interest rate.
Interest rates on fixed deposits vary from bank to bank and NBFC. Currently FD interest rates range between 6.5% to 8% and even some banks are offering higher interest rates for senior citizens.
How do Fixed Deposits work?
When an account holder deposits money with a bank, the lender can use that cash as a source of loans for other customers or companies. In lieu of that, the bank will provide interest to the account holder. Now, it becomes a challenge for the bank officials when these money can be withdrawn by the account holders at any point of time. Hence comes the fixed deposit where the bank gives higher interest rate if the investors agree not to withdraw their money for a predetermined period.
Fixed deposit accounts offer slightly higher interest as compared to normal savings or interest bearing accounts. Interest rates on FDs are high due to restrictions on withdrawal.
FD investments are risk-free investments, making them a good option for people with a low risk appetite.
Consumers are more likely to buy fixed deposits, also known as fixed deposits, when banks offer higher interest rates. For those who are looking for a stable and risk-free investment, fixed deposits are a better option as interest rates do not fluctuate frequently. Banks and NBFCs only change FD interest rates based on the repo rate announced by the Reserve Bank of India from time to time.
withdrawal
One thing investors should know is that as the name suggests the investment in FD is for a fixed period. Hence, premature withdrawal or liquidation of fixed deposit will attract penalty. If you are not in a serious state of financial emergency then it is better not to touch your FD. You must wait till the end of the maturity period to receive the full interest and total principal, after which the amount will be automatically transferred to your linked savings account.
Benefits of Fixed Deposit
Money Back Guarantee
Safe and stable investment
Flexible in nature
Relatively high interest rate
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