A Detailed Guide to How Does Fixed Deposit Work for You!

How does fixed deposits work?

Fixed deposits are one of the best ways to save money for the future with the desired lock-in period. There are banks that provide their customers with a lock-in period of 7-9 days to create fixed deposits that go till 5-10 years. The amount after maturity can still be deposited for a required time period. However, it is to be noted that withdrawing the amount before the maturity period can attract a penalty.

Unlike a regular fixed deposit account, a Paytm Payments bank fixed deposit account is a little different as it does not charge a penalty for the premature withdrawal of the amount. Apart from that, the Paytm Payments bank fixed deposit account offers numerous other benefits which we will discuss in the end, but before that, let us first understand how fixed deposits work.

What is a Fixed Deposit?

Fixed deposit is known as ‘term deposit’ or ‘time deposit’. It is an investment instrument service offered by banks and non-banking financial companies (NBFC). FDs are considered to be the best safest investment instrument that offers users the flexibility to invest any amount (as per the bank’s FD policy) for a particular time period. Additionally, FD offers the following features-

  • Customers are eligible to earn interest on the pre-decided tenure as per the rate of interest locked earlier

  • Rate of interest on the decided fixed deposit amount does not change as it remains unaffected by any changes happening in the market

  • The interest offered on FD is either periodically credited or at the time of maturity

  • Premature withdrawal of FD amount is not allowed, however, in case of emergency or urgency, a customer can withdraw the amount by paying a penalty for it

How does Fixed Deposit work?

The amount invested in the fixed deposit account remains blocked for the pre-decided period, where a customer deposits an amount every month and receives an interest against the same. Banks allow customers the flexibility to invest the amount from a period of 7 days to 10 years. After the maturity period, the amount can still be invested for the desired tenure. The customers are not allowed to withdraw the amount before maturity; however, withdrawing the amount before maturity due to any circumstances attracts a penalty to be paid.

After FD maturity, the bank credits the entire amount along with the interest to the customer’s bank account. Further, it is advised to keep the following things in mind-

  • It is a must to know the type of FD to invest in

  • Customers can try using the FD calculator to calculate the total interest to be earned on the deposited value

  • Benefits to be taken from fixed deposit

  • The flexibility to deposit the amount

How to Open an FD Account Online?

Following are the steps to be followed by the customer to open an FD account online-

  • Login to the bank’s net banking platform

  • Locate the section to create the fixed deposit

  • Fill in all the required information, submit all the required documents and an amount for FD

  • FD account will be created

Things to note

  • In case of opening an FD account with the existing bank, KYC documents are not required to be submitted

  • Alternatively, if you are opening an FD with a new bank, be handy with all the necessary KYC documents and a passport size photograph

How to Open an FD Account Offline?

Following are the steps to create FD offline-

  • Visit the bank’s branch

  • Fill the FD application form along with all the necessary details, KYC documents and an amount to create FD

  • Submit the form and other requirements to the concerned official

Things to note

  • If you are opening an FD account with a new bank, make sure to connect with the official who can guide you through the process

  • Carry all the KYC documents and a passport size photograph for the completion of the FD account process

What are the Benefits of Opening an FD Account with Paytm?

Listed below are the benefits to open an FD account with Paytm Payments Bank-

  • Paytm Payment bank offers an interest rate of 5.5% on regular fixed deposits and 6% on senior citizens FDs (as in September 2021)

  • It is easy to withdraw money from FD before maturity without paying the penalty

  • Paytm offers the option of partial withdrawal from the fixed deposits

  • A minimum amount of Rs. 100 is required to create a fixed deposit

  • Paytm offers the facility of auto-create fixed deposits when the amount in the Paytm savings account exceeds beyond a certain limit as set up by the user

  • Opening an FD account with Paytm Payments bank is a one-step process. All a customer requires is to add the amount and create FD

  • Fixed deposits with Paytm can be created and/or dissolved at any time, from anywhere and requires only a single click

FAQs
Can I open an FD online?
Yes, banks allow customers the flexibility to open FD online by submitting the requirements.
What is the minimum amount to be deposited to open FD?
The minimum amount to open an FD with Paytm Payments Bank is Rs 100.
What is the interest rate offered by banks on FD?
The interest rate offered by Paytm Payments Bank on FD is 5.5% whereas 6% is offered to senior citizens.
Who can create FD?
Any person with an active bank account can open a fixed deposit account.
Can I open a fixed deposit account by visiting the bank?
Yes, users can open a fixed deposit account by visiting the bank, submitting the documents, an amount to create FD and fulfilling other requirements.
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