Fixed Deposits are term deposit accounts that allow you to receive interest by depositing a set sum for a set period of time. Almost all of India’s major banks offer various forms of fixed deposits with terms ranging from seven days to twenty years. An online fd is the perfect option for risk-averse investors since it allows them to gain returns on their money over time. When you put the money in, it is secured, and when it matures, you will get both the principal and the interest.
Types of Fixed Deposits in India
Various banks in India provide various types of fixed deposits. Cumulative and non-cumulative FDs are the two main types. Interest is not charged during the currency of the deposit in cumulative deposits; instead, it is paid along with the principal sum at maturity. A non-cumulative loan, on the other hand, pays interest along with the currency of the deposit. The interest rate, however, is the same in both schemes. Interest is normally charged quarterly on non-cumulative deposits; if it is paid weekly, it is at a reduced rate. You can also choose from monthly, quarterly, half-yearly, or yearly interest payments, depending on your needs. In the case of a cumulative deposit, interest is compounded quarterly.
When it comes to the most popular forms of fixed deposit accounts in India, banks offer a variety of fixed deposit plans. Let’s take a quick look at the FD types:
- Standard Fixed Deposits: It is the most common form of FD offered by all banks. The following are some of the characteristics:
- Money is stored for a set period of time.
- The interest rate is set by the bank ahead of time.
- Tenure will last anywhere from seven days to ten years.
- Rates of interest are higher than those offered by a savings account.
- Tax Saving Fixed Deposits: These deposits, as the name suggests, help you save money on taxes and are available at almost all banks.
- A tax exemption of up to Rs. 1.5 lakh is available per year.
- These FDs have a 5-year lock-in period from which you are unable to withdraw the funds.
- Only one-time lump-sum payments are permitted.
- Special Fixed Deposits: These funds, like traditional FDs, are invested for fixed time periods. The only difference is that you would receive more interest on your money if you do not withdraw it for the agreed period of time than you will on a standard FD.
- Regular Income Fixed Deposits: This form of FD is the perfect fit for you if you have a small income and rely on interest from bank deposits to cover your monthly expenses. You have the option of receiving interest payments monthly or quarterly.
- Senior Citizen Fixed Deposit: People over the age of 60 may open a fixed deposit account under the senior citizens’ fixed deposit scheme. Over and above the normal interest rates, these FD schemes give an extra interest rate of about 0.50 percent. This system also allows for flexibility in terms of tenure.
- Flexi Fixed Deposit: These are the FDs that are linked to your savings account. You can open an FD and connect it to your savings account with an initial deposit of your choice. You may also set a cap on your savings account, with any surplus being moved to a fixed-income account.
Is it true that FDs are tax-free?
No, FDs are not tax-free investments. However, if you choose tax-advantaged fixed deposits, you can save money in the long term. Under section 80C of the Indian Income Tax Act, 1961, you can claim a deduction of up to Rs.1.5 lakh on such FDs.
Among the many FD providers in the industry, Bajaj Finance is one of the most reliable. Higher returns, flexible tenure, lower minimum deposit cap, and loan against FD facility are just a few of the benefits that Bajaj Finance FD offers to investors. When it comes to FD interest rates, Bajaj Finance offers the highest rate of 7.00 percent. On the other hand, the current Bajaj Finance FD interest rate for senior citizens varies from 6.40 percent to 7.25 percent.