What is a Fixed Deposit?

A fixed deposit is a type of savings account that allows us to deposit a lump sum amount for a fixed period of time for which we also get interest. Fixed deposit: Whatever money we deposit, we get fixed interest on it, and it depends on how long we are depositing the money. We get the benefit of it after the completion of the period. We get the money by combining the money you have deposited and the interest accrued on it.

Fixed deposits are also called term deposits.

Is a Fixed Deposit Paid Monthly?

A Fixed Deposit (FD) is an investment option where account holders deposit a lump sum with a financial institution for a fixed term, usually between one month and five years. It offers a higher interest rate compared to a regular savings account. The interest is paid at regular intervals—such as half monthly, monthly, quarterly, or yearly—or at the end of the tenor (maturity). FDs can be opened with banks, non-banking financial companies (NBFCs), credit unions, or building societies.

Invest in Fixed Deposits with these Interest Rates

This is the list of some Indian banks that offer good annual interest rates on fixed deposits if we deposit under 1 crore.

• The first is the State Bank of India, whose interest rate for general citizens is from 3.50% to 6.50% and its tenure is from 7 days to 10 years. If we talk about interest rates for senior citizens, it is from 4.00% to 7.50%, with tenure from 7 days to 10 years. 
• The second is Punjab National Bank, whose interest rate for general citizens is from 3.50% to 6.50% and its tenure is from 7 days to 10 years, and if we talk about interest rates for senior citizens, then it is from 4.30% to 7.30%, whose tenure is also from 7 days to 10 years. 
• The third is HDFC Bank, whose interest rate for general citizens is from 3.00% to 7.00% and its tenure is from 7 days to 10 years, and if we talk about interest rates for senior citizens, then it is from 3.50% to 7.75%, whose tenure is also from 7 days to 10 years. 
• Fourth is the Post Office, whose interest rate for general citizens is 6.90% to 7.50% and whose tenure is from 7 days to 10 years, and if we talk about senior citizens’ interest rates, then it is from 6.90% to 7.50% whose tenure is also from 7 days to 10 years. 
• Fifth is Axis Bank, whose interest rate for general citizens is 3.00% to 7.00% and its tenure is from 7 days to 10 years, and if we talk about senior citizen’s interest rates, then it is from 3.50% to 7.75%, whose tenure is also from 7 days to 10 years. 
• Sixth is ICICI Bank, whose interest rate for general citizens is from 3.00% to 6.90% and its tenure is from 7 days to 10 years. If we talk about interest rates for senior citizens, it is from 3.50% to 7.50%, with tenure from 7 days to 10 years.

Can I withdraw a fixed deposit amount anytime?

No, you cannot withdraw the amount of the fixed deposit at any time. Because fixed deposits are made for a specific period of time. But if you withdraw the amount of the fixed deposit before the maturity date, it becomes a premature withdrawal. We also suffer a loss due to this; a penalty is also imposed on fixed deposits, and the interest earned is also reduced.

But what happens when we prematurely withdraw? Let’s learn more about it.

• The first case can be an emergency

The option of premature withdrawal is the same for every customer, whoever wants instant money for emergency purposes.

• Now let’s talk about the penalty charged on premature withdrawal

    In premature withdrawal, the customer must deposit the penalty to the bank and its range can be between 0.5% and 1% but many such banks charge zero penalty on      premature        withdrawal

• How much interest do banks offer on fixed deposits?

    Generally, banks give interest for the entire period, but when it comes to premature withdrawal, the interest charged is 0.50% or even 1% less.

• Non-callable Fixed Deposits

    Some fixed deposits, which we also call non-callable FDs, do not allow premature withdrawal.

    But friends, before withdrawing your fixed deposit, you must look for another option to avoid a penalty.

How to Calculate Fixed Deposit Interest?

Most of the banks provide the facility of FD calculators along with fixed deposit schemes on their website, the benefit of which is given to the customer to calculate FD as per his/her requirement. In this article, we will tell you how to use a fixed deposit calculator. Through this, you can calculate your monthly interest. So, let’s go step-wise.

Step 1: First of all, you have to go to the official portal of the bank.

Step 2: After that, you have to click on the fixed deposit calculator option, which will take you to the page where you have to calculate the FD interest.

Step 3: Then there you have to enter the amount you want to deposit after selecting the type of customer, and finally you have to select the type of fixed deposit and for how much time you want to deposit the FD.

When you enter all these details, then you will see the interest amount of your fixed deposit on your screen.

Can We Get a Loan Against a Fixed Deposit?

The answer is yes; you can get a loan against your fixed deposit. If you want to get a fund without closing your fixed deposit, then this can be a good option. Here are some things you need to know before taking loans against FDs.

• There is the possibility of obtaining a loan up to 95% of your fixed deposit, depending on your bank and the amount you deposit
• FD loans are typically less expensive than personal loans. 
• Loans against FDs usually do not charge processing fees. 
• The repayment term can be customized to suit you.
• An Indian resident over 18 years of age is eligible to receive a loan against an FD.
• You are usually not required to have a good credit score to qualify for a loan against an FD. 
• You can still earn interest on your FD while having a loan against it.

These are some of the banks that offer customers a good loan against fixed deposits:

1. State Bank Of India
2. Federal Bank
3. Bank of Maharashtra
4. Bajaj Finserv

Benefits of a fixed deposit?

Friends, we have told you a lot of things about fixed deposits till now—how fixed deposits give us interest, how we can calculate the interest before investing money in fixed deposits, and which banks give us a good offer on fixed deposits. Then let us know in some points what the benefits of a fixed deposit are after all.

• We get guaranteed returns in fixed deposits.
• Our capital invested in it is completely protected, so we do not have to worry that our investment will be lost somewhere.
• A fixed deposit has low risk.
• The best thing about it is that you can choose the investment period as per your requirements.
• Tax benefits are also available under Section 80C of the income tax return.
• The facility of loans and overdrafts is also provided to us.
• Opening a Fixed Deposit account is also easy; you can open it both online and offline.
• In this, you also get the option of premature withdrawal, about which we have told you in full detail above.

If you liked this blog post, do share it with your friends and family. Financeo library is with you in your journey of fixed deposits. If you have any doubts, you can ask us by email or comment. Thank you for giving your valuable time.

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