Everything You Need to Know About Fixed Deposits

Most modern-day individuals perceive fixed deposits as an excellent investment instrument. Before you contact the banks and other finance companies to apply for one, let’s understand what a fixed deposit entails.

Well, the people deposit a lump sum for a specific period.

In return, they get a definite interest. They can withdraw the money after the tenure ends. According to the best loan distributors, they may also reinvest it for another term.

For more information, please go through the rest of the write-up now.

Features of Fixed Deposits

Mentioned below are significant features of fixed deposits:

  • The investment tenure of a fixed deposit generally ranges from one day to multiple years, and it varies across the banks.
  • The return on investment is usually compounded periodically. It can be quarterly, monthly, or annually.
  • Senior citizens enjoy higher returns – approximately 0.5% higher.
  • The top loan distributors said that full or partial withdrawals are acceptable, but you cannot forget about penalties.
  • Investors can accumulate high returns if they agree to invest the money for an extended period.
  • Loans against fixed deposits are readily available.

Debunking Common Fixed Deposit Myths

Before you open a fixed deposit, please make sure you do not believe any of the below-mentioned myths.

  • Tax Deducted at Source or TDS is Mandatory on Fixed Deposits Although fixed deposits are taxable, not everyone has to pay the taxes.

    The returns from fixed deposits are considered a part of your total income. If your interest income is more than Rs.10000 in one year, the TDS will be 10%. The TDS is deducted once for businesses if the interest exceeds Rs.5000.Housewives, minors, senior citizens, and anyone with no taxable income can avoid the TDS.

  • Premature Withdrawal is the Only Option During EmergenciesThe companies offering the best-fixed deposit schemes said they allow partial withdrawal of funds. You may use the amount to take care of emergencies, and the balance continues earning interest.
  • Steady Interest Payments on the Fixed Deposits Fetch Higher ReturnsFixed deposits have two options – one where you get interest pay-outs at regular interims and another where the entire amount is received on maturity. The latter fetch higher returns. The interest paid is, after all, multiplied or compounded frequently. The higher the compounding, the more the yield.

How to Open a Fixed Deposit?

Nowadays, you can open a fixed deposit without stepping out of your house. Below are steps for both online and offline procedures.

Online

  • Log into the bank account.
  • Search for the fixed deposit or FD option.
  • Select the open fixed deposit option.
  • Fill out the application form.
  • Upload the necessary documents.
  • Transfer the amount you plan to invest.

Offline

  • Visit the nearest branch of the selected bank or financial institution.
  • Fill out the offline application form with utmost caution.
  • Attach the necessary documents and submit the form.
  • Offer a cheque for the amount you plan to invest.

The modern-day loan vendors said fixed deposits are ideal for individuals who do not wish to bear any risk. Your investment remains safe since it is always under the supervision of RBI. Open one without further hesitation.

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