What are the Various Types of Fixed Deposits?

Types of fixed deposits

Fixed deposits are a good way to invest today and save for the future. The depositor, after the FD maturity, gets the principal amount along with the interest earned on it. Paytm Payments Bank fixed deposit offers numerous advantages like no penalty on the withdrawal of amount before maturity, liquid FD, one-step process to create FD, competitive interest rate and more.

There are types of fixed deposits that are offered by banks to their customers to let them invest in FDs that suit their needs and budget accurately. The difference between the types of fixed deposits lies in their features, advantages, limitations and flexibility in terms of premature or mature withdrawals.

In this blog, we will explain the types of fixed deposits and why it is a good decision to create a Paytm Payments bank fixed deposit account.

What is a Fixed Deposit?

Fixed deposits are also known as ‘time deposits’ or ‘term deposits’. They are one of the best and safest investment services offered by banks and non-banking financial companies (NBFC). The service allows customers to deposit a lump sum amount for a particular time period with the financial institutions. Apart from that, there are other features that make FD the choice of today’s market-

  • Customers can earn interest on the deposited amount for the pre-decided tenure, as per the rate of interest locked earlier
  • The rate of interest which is decided during the time of the FD opening process remains unaffected by any changes in market
  • Customers can earn interest either periodically or at the time of FD maturity
  • Premature withdrawal of amount from the fixed deposit account before maturity makes customers pay a penalty for it
  • Banks offer competitive interest rates on fixed deposits
  • Customers are given the flexibility to create fixed deposits from a minimum value to the maximum value as per the banking FD guidelines
  • It is up to the customers to choose the tenure for the FD

Overview of Fixed Deposits

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

ParametersExplanation
Fixed DepositsType of investment option
Customers are required to deposit a fixed amount for a decided tenure
Principal amount along with the earned interest is credited to the customer’s account after maturity
Premature withdrawal is allowed with a penalty to be paid
Who offers FDsBanks
Financial institutions
Ways to open FDOnline
Offline
Types of FDsCumulative Fixed Deposit
Non-Cumulative Fixed Deposit
Bank Deposits
Senior Citizen FD
Company Deposits
NRIs FDs
Regular FDs
Tax Saving FDs
Flexi Fixed Deposit
Standard FDs
RiskNo risk
Premature withdrawalsAllowed but with a penalty to be paid
How to calculate FDUse FD calculator available online
Interest ratesInterest rates differ from bank to bank

What are the Types of Fixed Deposits?

Banks and financial institutions offer the flexibility to their customers to create fixed deposit accounts as per their requirements and the amount to invest. It is to be noted that each type of fixed deposit is different and they differ by their advantages, limitations, features, etc. Hence, a customer should ensure what kind of benefits he/she requires from the fixed deposit.

Listed below are the types of fixed deposits and their meaning-

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 provided at regular intervals
FD tenure ranges from 1 to 5 years
In case of regular interest payout, one will be eligible for a decreased amount at the time of maturity
Suitable for people who need regular income in the form of interest
Bank DepositsOffered by banks to customers with saving accounts
Rate of interest is lower than the rates offered by non-banking financial companies
Company DepositsOffered by NBFCs with a higher rate of interest
For companies with good creditworthiness
Senior Citizen FDFor people above 60 years of age
Offers higher rate of interest as compared to other FDs
Flexible tenure
NRIs FDsApplicable for NRIs, OCI, PIO with NRO accounts
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 predetermined rate of interest is offered
High-interest rate
Tax Saving FDsOffered by a major number of banks
Tax exemption up to Rs. 1.5 lakh annually
Lock in period of 5 years, before that, the amount cannot be withdrawn
One time lump sum amount deposit
Flexi Fixed DepositSuch FDs are linked to the 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 as compared to saving account

How to Find the Right Fixed Deposit?

Before choosing a fixed deposit, it is good to go through all the features, advantages, limitations, flexibility, etc., about the type of the fixed deposit. Following are the few basic things to keep in mind before choosing the desired fixed deposit

  • It is advised to compare all the FD options offered by different banks
  • Understand whether you want to invest in cumulative FD or non-cumulative FD
  • Review the lender’s credibility through the rating given by CRISIL, ICRA
  • Finally, look for a bank that offers satisfactory customer service and a smooth onboarding process to open an FD

What are the Documents required to Open Fixed Deposits?

Following are the list of documents a customer needs to submit to create a fixed deposit

Documents required for fixed deposit
Photocopy of PAN card
Voter ID card
Government-issued ID card
Duly filled and signed application form with Passport size photograph
Residential proof like a photocopy of passport, telephone bill, electricity bill
Original documents for verification

Who can open Fixed Deposits?

List of people are eligible to open a fixed deposit account-

Who can open FDs
Resident of India
NRI
Parents/guardians on behalf of their minor
Senior citizen
Owner of an individual or a joint venture
Own a sole proprietorship
Owner of a company

Why create Paytm Payments Bank Fixed Deposit?

There are several reasons listed below to create Paytm Payments Bank fixed deposits-

Reasons to create Paytm Payments Bank fixed deposit
PPB fixed deposit offers a 5.5% interest rate of regular fixed deposits and 6% on senior citizens FDs
No penalty charged on premature withdrawal of FD amount
Partial withdrawal from the fixed deposit is allowed
Minimum amount of Rs 100 is required to create a fixed deposit
Auto create fixed deposit is available
FDs can be created or dissolved at any time
Creating FD is a one-step process
Documents are not required to create FD
FAQs
Is it possible to get FD interest monthly?
Interest is offered to the customer on the basis of decided terms. The customer during the FD account opening process can opt for any of the options- monthly, quarterly or annual interest.
Can I open my FD online?
Yes, the customer can open FD online by logging into the bank’s online portal.
How to create a Paytm Payments Bank fixed deposit?
Login to the Paytm application, click on Paytm bank, next, click on create a fixed deposit, enter the amount and proceed to 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.
0 Shares:
You May Also Like