On this page, we are going to read all the information about Fixed Deposit, then definitely read the post completely.
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Let us read and understand the information about the advantages and disadvantages of what is Fixed Deposit today.
what is fixed deposit
Fixed Deposit is the safest way to save money. Fixed deposits offer the safety of investment as well as better interest rates.
Bank We offer you various tenure options of fixed deposits which range from 6 months to 10 years. The interest rate of FD depends on many factors.
like:- FD tenure, financial condition, investment amount, age of the investor and the policy of the FD.
Apart from this, Banks Financial Institutions also offer many other features.
like:- Sweep in, Tax FD saver, Loan against FD etc.
You get higher interest rate on fixed deposits. You get the facility to easily withdraw and deposit your money.
Why choose Fixed Deposit
There are many benefits and features available on making a fixed deposit. Due to which FD has become the most popular investment option in India. Let us read below why one should choose Fixed Deposit.
1. Guaranteed Returns on Investing in Fixed Deposits
All investors get benefits when investing in fixed deposits. Bank The interest rate that it promises to pay on the investment is available to the investor at the time of investing in fixed deposits.
Investing in FDs guarantees safety to every investor and hence does not carry any risk on the investment.
2. Easy Options in Fixed Deposits
There are many flexible investment tenure options available to you on Fixed Deposits. Its duration can be from 6 months to 10 years. FD interest rates also depend on the tenure. However, tax The tenure of savings FDs is 5 and 10 years.
3. Investment Amount on FD
The minimum and maximum investment amount of FD may vary from bank to bank. Some banks have a minimum investment amount of Rs.100. While there is no limit on the maximum investment.
The minimum investment amount in a tax saving FD is Rs 1.5 lakh per annum. The interest rates available on an investment of Rs 1 crore in FDs are different from those for investments of less than Rs 1 crore.
4. Interest on FD
The interest rates available on fixed deposits are higher than on savings accounts. FD interest rates range from 3.5% to 9% p.a. and depend on the bank, the age of the investor and the investment tenure.
5. Benefits of Fixed Deposit
Any investor can use the Fixed Deposit Calculator to know the benefits of FD. Fixed Deposit Calculator can give the principal return based on the investment amount, interest rates and tenure.
6. You can take a loan against Fixed Deposit.
Banks and financial institutions provide all customers the facility to take loan against FD. The interest rates of this loan range from 1% to 2%, which are higher than FDs and lower than normal loans.
People who need money suddenly and instead of withdrawing their FD amount, they can take loan against FD.
If an investor withdraws his FD amount before the end of his tenure, then the interest rate is lower than the rate offered at the time of investment and according to the day on which the money is withdrawn.
This results in loss to the investor. Therefore, instead of breaking FD, investors should opt for loan against FD.
Loans against FDs are safe as the FD is mortgaged with the bank as security and hence the interest rate is lower than a normal loan. Banks and financial institutions give loans up to 90% of the FD amount.
7. Take Credit Card Against Fixed Deposit
If you have an FD then you have to replace it with Credit Card Can get it. It is a secured credit card, so it is not necessary to have a good credit history.
If the cardholder uses this card carefully, then he can build a good credit history and can also improve his credit score.
8. Withdraw some money ahead of time
Banks and financial institutions provide this facility that you can withdraw your money before the completion of the FD period but it attracts a penalty. In this, the interest rate is lower than the rate offered at the time of investment and according to the day of withdrawal.
Advantages of Fixed Deposit
- Interest rates are higher in fixed deposits.
- FD renewals are easy and help you save your money.
- By doing Fd one does not read any effect from the market volatility.
- The risk of loss of principal in this is negligible.
- FD interest rates offered by NBFCs are higher as compared to banks.
- Senior citizens often get higher FD interest rates.
Disadvantages of Fixed Deposit
1. Invest money in different FDs.
- You should not put all the money in one FD.
- If you have to invest 5 lakhs in FD, then it is more correct to have 5 FDs of 1 lakh in more than one bank.
- Whenever you need money, you can get one FD broken in the middle according to your need, this will keep the rest of your FD safe.
2. Tax on interest earned on FD
The interest earned from FD is taxed as per the income tax slab.
If the interest earned on FD exceeds Rs 10,000 in a financial year, then there will be TDS deduction.
This will be 10% of the total interest earned. For senior citizens, this limit is 50 thousand.
If your income is below the taxable range, Form 15G and Form 15H can be submitted to the bank to not allow TDS deduction on FD.
3. Interest
- Banks earlier had the option to withdraw interest on quarterly and annual basis.
- Some banks are now offering the option of monthly withdrawal as well.
Fixed Deposit Interest Rates 2022
Fixed deposit interest rates vary by bank and FD tenure. Before investing in FDs, check the interest rates of different banks and financial institutions so that you can choose the best option.
Fixed Deposit interest rates of top 10 banks in India for tenors up to one year
Fixed Deposit Interest Rates of Top 10 Banks with Tenure up to 2 Years
Fixed Deposit Interest Rates of Top 10 Banks with Tenure up to 4 Years
Fixed Deposit Interest Rates of Top 10 Banks in India for Ordinary Citizens
Top 10 Bank Fixed Deposit Interest Rates for Senior Citizens in India
Can I withdraw money in an emergency after making a fixed deposit?
Yes, if there is an emergency, you can withdraw all your money.
After making an FD, you have the opportunity to withdraw your money even before maturity. You have to pay some charges for pre-mature withdrawal. This charge is different in different banks. Due to this feature of FD, it is also called liquid investment.
Can I get loan against FD?
One of the features of FD is that you can also take loan against FD. If you suddenly need money, then without breaking the FD, you can take a loan against it. Usually, up to 90 percent of the amount of FD of Rs. The interest on loan against FD is 1% more than that of FD.
Do you get fixed interest on FDs?
There is no change in the interest rates on FD, once you have invested, you will get the interest rate guaranteed. During this, even if the interest rate is low, the fixed interest will be available. If the bank increases its interest rate during this period, then the investor does not get the benefit. At the same time, even if you reduce it, then the investor will suffer some loss.
How many investment options are there in FD?
There are many investment options available in FD, in which you can get FD according to your amount and time. Generally, FDs can be made for tenures ranging from 6 months to 10 years. SBI offers minimum FD up to Rs 1000 and there is no limit on the maximum amount of FD in SBI.
Are Fixed Deposits Risk Free?
FD is considered to be the most risk free investment option in the country. Banks are monitored by RBI. FD is a safer option than any other deposit option.
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