If you want to get the best plan on fixed deposit, it’s necessary to compare FD rates of interest. Making a comparison of the interest rate on fixed deposits provided by different banks and financial institution is a simple process. You can find the interest rate on the web easily. It can help you decide which financial institution is the best for you. But make sure that the bank or financial institution you choose is reputed and has a long history. Your money is valuable and you should only trust the most reliable sources with it.
What is a Term Deposit?
The other name for a fixed deposit, term deposit is a popular form of investment that individuals or companies make for a certain period of time. During the tenure of the deposit, the depositor will get a fixed interest rate on the amount which will be received in one of two terms. One is between maturity, when you need regular payouts. The other payout is when the deposit completely matures and you get a payout of the full interest amount. You can choose the type of term deposit, amount you want to deposit and the tenure.
Normally, the money invested as term deposit can’t be withdrawn in between. You’ll receive the principal amount along with the interest on maturity. However, if you need the money urgently, you can withdraw prematurely. Doing so incurs a penalty. You also won’t receive the same benefits as what you would get if you let the deposit mature completely.
Whom You Can Get Term Deposits?
Typically, term deposits are provided by financial institutions that are approved like banks, credit unions, building societies etc. The interest rate of term deposit is not same with all the providers. They can have differences with one another. So, it’s necessary for everyone to do proper research on the rate of interest on term deposit so that you have better understanding. Select one that suits you the best.
Different Types of Term Deposit or Fixed Deposit
Apart from normal fixed deposit plan with financial institution, there is a facility for tax saving fixed deposit plan as well. When you invest in a tax saving fixed deposit scheme, it lets you receive tax benefits when you’re filing your income taxes, under the section 80C of the Indian Income Tax Act. It lets you save some money when you pay your income tax to the government of India at the end of every financial year.
In case of a normal fixed deposit scheme, you can choose the term and amount depending on your preferences. From monthly schemes to FD schemes of 3 years’ tenure and more, it depends on you to decide the tenure of fixed deposit. You can even choose a low to high amount to be kept as fixed deposit. You’ll be provided with the fixed rate of interest on the amount you’ve deposited in your fixed deposit account on maturity. Since the amount can’t be withdrawn before maturity, it’s better to have a fixed deposit for a smaller tenure. But if you don’t have any requirement for the money in the deposit, you can go ahead and invest in a longer tenure.
But before making any investment, make sure to read all the rules and regulations regarding this with the financial institutions so that you don’t find any unwelcome surprises waiting for you. You can even have more than one fixed deposit with the same financial institution. That can be helpful if you’re setting up different deposits with different tenures so that you can get a regular payout.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the publication