What are the Various Types of Fixed Deposits?

Types of fixed deposits
Types of fixed deposits

Banks offer various types of fixed deposits to their customers, allowing them to invest in FDs that are tailored to their specific needs and budget. The difference between fixed deposits is based on their characteristics, benefits, limitations, and flexibility in terms of premature or mature withdrawals.

In this blog, we will discuss the various types of fixed deposits and how to choose the right one.

What are the Types of Fixed Deposits?

Banks and financial institutions allow their customers to open fixed deposit accounts based on their needs and the amount they wish to invest. It should be noted that each type of fixed deposit is unique in terms of its benefits, limitations, features, and so on. As a result, a customer should consider what kind of benefits he or she requires from a fixed deposit.

The following are the different types of fixed deposits and their definitions:

Type of Fixed DepositsExplanation
Cumulative Fixed DepositInterest is only available at the time of maturity
Users are not eligible for interval-based interest
Higher interest rate
Suitable for people who are not looking for regular interest payment
FD tenure ranges from 1 year to 5 year
Non-Cumulative Fixed DepositInterest is paid at regular intervals
The tenure of FDs ranges from one to five years
In the case of a regular interest payout, one will be eligible for a lower amount at maturity
Suitable for people who require a regular source of income in the form of interest
Bank DepositsOffered by banks to customers with saving accounts
Interest rates are lower than those offered by non-banking financial institutions
Company DepositsOffered by NBFCs with a higher rate of interest
For companies with a good credit rating
Senior Citizen FDFor people over the age of 60When compared to other FDs, this one offers a higher rate of interest
Flexible tenure
NRIs FDsNRIs, OCIs, and PIOs with NRO accounts are eligible
Higher rate of interest as compared to traditional saving accounts
Fixed tenure
Payment mode- NEFT/RTGS from NRO bank account
Regular FDsRegular form of investment
User can invest the amount for a particular time period
A fixed rate of interest is provided
High-interest rate
Tax Saving FDsOffered by a major number of banks
Annual tax exemption of up to Rs. 1.5 lakh
Lock in period of 5 years, before that, the amount cannot be withdrawn
One time lump sum amount deposit
Flexi Fixed DepositThese FDs are linked to a savings account
Can be created with the initial deposit of choice and later be linked to the savings account
Customers can limit the savings on savings account and the excess can be transferred to FD
Standard FDsFixed tenure
Predetermined rate of interest
Tenure starts from 7 days to 10 years
Higher interest rates than savings accounts

How to Find the Right Fixed Deposit?

Before selecting a fixed deposit, it is a good idea to go through all the features, benefits, limitations, flexibility, and so on about the type of fixed deposit. Following are the few basic things to keep in mind before choosing the desired fixed deposit-

  • It is recommended that you compare all of the FD options provided by various banks
  • Determine whether you want to invest in cumulative or non-cumulative fixed deposits
  • Examine the lender’s credibility using the ratings provided by CRISIL and ICRA
  • Finally, when looking for a bank to open an FD, look for one that provides good customer service and a simple onboarding process
FAQs
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.
Can I open my FD online?
Yes, the customer can open FD online by logging into the bank’s online portal.
How do I open a Paytm Payments Bank fixed deposit account?
Log in to the Paytm app, select Paytm Bank, then Create a Fixed Deposit. Enter the amount and click Create Paytm Payments Bank Fixed Deposit.
Can I withdraw the FD amount before maturity?
Banks offer ease for premature withdrawal of the amount from FD with a penalty to be paid.
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