Fixed deposits are a type of financial instrument offered by banks that are considered one of the safest investment options available. Fixed deposits offer a higher interest rate than a regular savings account. Banks offer flexibility in the selection of fixed deposit holdings that can vary from 10 days to 10 years. Interest rates on fixed deposits depend on several factors, such as the tenure of the deposit, the financial situation, the amount of the investment, banking policies. And apart from this, banks and financial institutions offer several features added to the general fixed deposit, such as the deposit-in-deposit facility, the fixed tax-saving deposit. In other words, the fixed deposit offers a greater return on investment, greater flexibility, greater stability and protection of money earned with effort by investors.
Why should choose Fixed Deposit
Fixed deposits offer several features and benefits, which makes it one of the most popular investment options for depositors. We have explained below some reasons why we should choose fixed deposits.
1. Guaranteed Return on Investment
Fixed deposits provide a guaranteed return on investment. Deposit interest rates apply (at the time of investment), which banks pay to invest in their investments and fixed deposits are always risk free.
2. High return
The interest rate on Fixed deposits is higher than the income from savings accounts. The interest rate on time deposits ranges from 3% to 9.20% per year, depending on the period of bank and individual investment.
3. Premature or partial withdrawal
The Fixed Deposit with Premature Withdrawal facility allows the depositor to close the Fixed Deposit before the expiration period. However, the account holder will have to pay the bank a premature fine for withdrawing the amount from the fixed deposit before the deposit period. But some banks also offer premature withdrawals without penalty charge. On the other hand, with fixed deposits without premature withdrawal, depositors cannot withdraw the amount of the fixed deposit before the deposit period.
4. Credit card benefits
Anyone holding a fixed deposit can avail a credit card secured against it
5. Flexible Deposit Tenure Options
Fixed deposit comes with flexible tenor option which can be from 7 days to 10 years. Fixed deposit interest rates also vary with different tenure options. However, account holders can only invest in tax-linked fixed deposits for a period of 5 years and 10 years.
And there are many similar reasons why people should choose fixed deposits.