Banks offer a range of fixed deposit options to their customers, allowing them to choose the one that best suits their needs and budget. The different types of fixed deposits vary in terms of their characteristics, benefits, limitations, and flexibility for premature or mature withdrawals. Customers can compare the options and choose the one that is best suited to their specific financial goals and circumstances.
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 offer a range of fixed deposit options that allow customers to invest based on their needs and the amount they wish to invest. Each type of fixed deposit is unique and offers different benefits, limitations, and features, so it’s important for customers to consider their specific needs and goals when choosing the right option for them. By carefully evaluating the different options available, customers can choose the fixed deposit that offers the benefits and features that are most important to them.
The following are the different types of fixed deposits and their definitions:
|Type of Fixed Deposits
|Cumulative Fixed Deposit
|Interest on a fixed deposit is only paid out at the time of maturity.Customers are not eligible for interest payments at regular intervals.Fixed deposits often offer a higher interest rate than regular savings accounts.They are suitable for people who do not need regular interest payments.The term of a fixed deposit can range from 1 year to 5 years.
|Non-Cumulative Fixed Deposit
|Interest is paid at regular intervalsThe tenure of FDs ranges from one to five yearsIn the case of a regular interest payout, one will be eligible for a lower amount at maturitySuitable for people who require a regular source of income in the form of interest
|Offered by banks to customers with saving accountsInterest rates are lower than those offered by non-banking financial institutions
|Offered by NBFCs with a higher rate of interestFor companies with a good credit rating
|Senior Citizen FD
|For people over the age of 60When compared to other FDs, this one offers a higher rate of interestFlexible tenure
|NRIs, OCIs, and PIOs with NRO accounts are eligibleHigher rate of interest as compared to traditional saving accountsFixed tenurePayment mode- NEFT/RTGS from NRO bank account
|Regular form of investmentUser can invest the amount for a particular time periodA fixed rate of interest is providedHigh-interest rate
|Tax Saving FDs
|Offered by a major number of banksAnnual tax exemption of up to Rs. 1.5 lakhLock in period of 5 years, before that, the amount cannot be withdrawnOne time lump sum amount deposit
|Flexi Fixed Deposit
|These FDs are linked to a savings accountCan be created with the initial deposit of choice and later be linked to the savings accountCustomers can limit the savings on savings account and the excess can be transferred to FD
|Fixed tenure Predetermined rate of interestTenure starts from 7 days to 10 yearsHigher interest rates than savings accounts
How to Find the Right Fixed Deposit?
When selecting a fixed deposit, it’s important to carefully consider the features, benefits, limitations, and flexibility of the different options available. Here are a few key things to keep in mind when choosing a fixed deposit:
- The interest rate and whether it is fixed or variable
- The term of the deposit and any penalties for early withdrawal
- Any minimum deposit or balance requirements
- The availability of regular interest payments
- Any additional features or benefits, such as the option to automatically renew the deposit at maturity.
Read More: Short Term FD Vs Long Term FD
Is it possible to receive FD interest on a monthly basis?
Is it possible to open a fixed deposit account online?
How do I open a Paytm Payments Bank fixed deposit account?
- Log in to the Paytm app on your device.
- From the home screen, select “Paytm Bank” from the menu options.
- On the Paytm Bank page, select the option to “Create a Fixed Deposit”.
- In the next screen, enter the amount you would like to deposit and click “Create Paytm Payments Bank Fixed Deposit”.
- Follow the on-screen instructions to complete the process.