Know all the Benefits of a Fixed Deposit Account!

Benefits of fixed deposits
Benefits of fixed deposits

There are several ways to save money for the future. Some of them are PPF, EPFO, RD, FD, and other investments. When comparing the various ways to save, FDs or fixed deposits are regarded as the best and risk-free way to save for the future.

Investing in fixed deposits is the best way to deposit 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 after the FD matures. Apart from that, some banks allow you to withdraw a portion of your FD account balance or the entire balance before maturity. However, the consumer must pay a penalty if the amount is withdrawn prematurely.

Furthermore, banks allow customers to open a fixed deposit account with a minimum deposit for a set period of time. In this blog, we will learn more about fixed deposit accounts and their benefits.

Overview of a Fixed Deposit Account

Below is what differentiates fixed deposit from other financial instruments to save-

Fixed DepositsOne of the various types of investment options
Customers are required to deposit a fixed amount for a predetermined period of time
Principal amount along with the earned interest is credited to the customer’s account after maturity
Premature withdrawal is permitted, but a penalty must be paid
Compound interest is paid if the FD amount is reinvested after maturity
Who offers FDsBanks
Financial institutions
Ways to open FDOnline
Types of FDsSenior Citizen FD
Tax Saving FDs
Flexi Fixed Deposit
Company Deposits
Cumulative Fixed Deposit
Non-Cumulative Fixed Deposit
Bank Deposits
Regular FDs
Standard FDs
RiskNo risk
Premature withdrawalsAllowed, but a penalty must be paid
How to calculate FDUse an online FD calculator
Interest ratesInterest rates differ from bank to bank

What are the Benefits of Fixed Deposit?

The benefits of fixed deposits are numerous, a few among them are listed below-

  • Safe investment option– FDs are regarded as one of the safest investment options available in the market when compared to other investment options. Throughout the predetermined tenure, this investment instrument provides a fixed rate of interest that does not fluctuate with market conditions.
  • Assured rate of interest– The user of an FD receives a fixed rate of interest on the amount deposited. Fixed deposit interest calculators are available on bank websites, allowing users to calculate the amount of interest they will receive at maturity.
  • Hassle-free investment– With a savings account, you can easily invest in fixed deposits by going to a bank branch or investing online. After the FD matures, the amount can be renewed or credited to the account.
  • Compound interest is available– Customers can reinvest the matured FD amount 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 on the interest earned.
  • Ease of reinvestment– When a fixed deposit account matures, customers can direct banks to credit the amount or reinvest the amount for another pre-determined tenure.
  • Flexible tenure– Banks allow customers to choose the duration of their fixed deposits. There are several banks that offer terms ranging from 7 days to 10 years.
  • Tax saving benefits– A large number of banks in India provide their customers with tax-saving fixed deposit options, lowering the taxable amount to be paid. It is recommended that you contact your bank to gain a detailed overview of the FD tax savings benefits.
  • Loan against FDs– Instead of taking out an unsecured loan and paying a higher interest rate, a person can use the fixed deposit amount to finance himself.
Is it possible to receive FD interest on a monthly basis?
The customer is offered interest based on the terms that have been agreed upon. During the FD account opening process, the customer can choose between monthly, quarterly, and annual interest.
Should I invest in fixed deposits?
Fixed deposits, such as Paytm Payments Bank FDs, are regarded as 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 penalty for early withdrawal.
What is the minimum value to be deposited on a fixed deposit account?
The minimum value to deposit in a fixed deposit account varies from one bank to another.
Can I add a 1 lakh rupee to my fixed deposit account?
The amount that can be deposited into a fixed deposit account is determined by the banking policies.
How much does it take to create Paytm Payments bank FD?
It takes less than a minute to set up a Paytm account.
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