Skip to content
Buddy Loan Official Blog

Site Navigation

  • Home
  • Personal Loan
  • Other Loans
  • Credit Score
  • EMI Calculators
  • Aadhaar Card
  • PAN Card

All You Need To Know About Fixed Deposits (March 2023)

buddyloan March 1, 2023 March 1, 2023
Fixed Deposit

Fixed Deposit

What Is A Fixed Deposit (FD)?

If you are afraid of taking risk during investment, fixed deposit is the best and safest option. The interest rate is accumulated on the deposited amount for a fixed time period. If you deposit an amount lesser than Rs.2 crore for less than a year, the interest rates will start from 3.00% p.a. And if you deposit the same amount up to 10 years, the interest rates will start from 9.54% p.a. However, the interest rates vary depending on the type of financial institutions such as public sector, private sector, or small finance banks. And the tenure period starts from 7 days to 10 years. Moreover, senior citizens are offered higher interest rates than the existing rates starting from 0.25% to 0.65%.

Also Read: How To Get Rid of Financial Problems With Standard Chartered Loans?

How Does a FD Account Work?

When you deposit a certain amount in your FD account, the money is locked for a fixed tenure period. And the interest that you earn on your principal amount gets accumulated throughout your tenure. This interest amount then gets added to your principal amount that you deposited after every specific interval.

As the tenure period starts from 7 days to 10 years, you have the freedom to choose the tenure and you can also open multiple FD accounts spread across different tenure periods. That way, you can earn more money on your investments. The best part is that senior citizens are eligible for additional rates which are usually 0.25% to 0.65% more than the existing rate. So they can also earn money even after retirement. Moreover, even NRIs (Non-resident Indians) can open Fixed Deposit accounts in India in the form of NRE (Non-resident External) and NRO (Non-resident Ordinary) FDs.

So if you are planning to open an FD account, you can open a deposit account in the bank where you already have a savings account. You can also open an FD account in banks where you don’t have a savings account. But, you have to go through the KYC process and provide relevant documents, including ID proof, address proof, passport size photographs, among others.

Types of Fix Deposit

Types of Fixed Deposits

There are 6 types of Fixed Deposits. Here is a brief about each type.

Normal Fixed Deposits:

  • Here, you will deposit money for a fixed tenure period.
  • The tenure ranges from 7 days to 10 years.
  • The interest rates for nominal fixed deposits are higher than a normal savings account.

Tax-Saving Fixed Deposits

  • Here, you will get a tax exemption on the principal amount of up to Rs.1.5 lakh in a calendar year.
  • The lock-in period for tax-saving fixed deposits is 5 years and you cannot withdraw the amount.
  • You can only have one-time lump sum deposit.

Senior Citizen Fixed Deposits

  • This type of fixed deposit is applicable only for individuals above 60 years of age.
  • Senior citizens are eligible for special interest rates which are usually 0.25% to 0.65% more than the existing rate.
  • The tenure period is flexible.

Cumulative Fixed Deposits

  • Here, the interest rate is added every quarter or year and is paid at the time of maturity.
  • Cumulative fixed deposits help to grow your savings substantially.

Non-Cumulative Fixed Deposits

  • Here, the interest will be paid monthly, quarterly, half-yearly, or annually, as per your choice.
  • It is a better option for pensioners looking for a regular source of income.

Flexi Fixed Deposits

  • Here, the fixed deposit is linked to your bank account.
  • Money juggles between your FD and savings account.

Features of a Fixed Deposit Account

  • It is much safer than other investment options.
  • It lets you earn an interest amount over a fixed period of time.
  • The tenure is flexible and ranges from 7 days to 10 years.
  • There is no cap on maximum deposit.
  • There are additional rates for senior citizens ranging from 0.25% to 0.65% more than the existing rate.

Eligibility Criteria For FD Investment

Here are the following criterias to be eligible to open an FD account in India:

  • Indian resident
  • NRI
  • Minors
  • Senior citizens
  • Companies
  • Partnership firms
  • Individuals or joint investors
  • Societies or clubs
  • Sole proprietorship

Documents Required for opening an FD account

The documents required to submit when opening an FD account are as given below:

  • Proof of identity: Voter ID, PAN card, Aadhaar card, driving license, photo ration card, senior citizen ID card, etc.
  • Proof of address: Utility bills, bank statement with cheque, Post-office issued identification card or certificate, etc.

Fixed Deposit Application Form

You can get the application form to open a fixed deposit in two options:

  • Offline: Visit the bank that you wish to open your FD in.
  • Online: Download the application from the official website of the bank that you wish to open an FD account in.

Fixed Deposits for NRIs

There are two types of fixed deposit accounts for Non-Resident Indians —Non-Resident External account (NRE) and Non-Resident Ordinary account (NRO).

  • NRE Fixed Deposit

Here the interest earned is free of tax and both the principal amount and interest are completely repatriable. The only drawback is that the money you deposit can get affected due to fluctuations in the currency rate.

  • NRO Fixed Deposit

Here, the interest earned is taxable based on the income tax category. However, you can avail the reduced tax benefit under the Double Taxation Avoidance Agreement (DTAA). And there is no risk of exchange rate fluctuation.

How to Choose the Right Fixed Deposit?

Choose the Right Fixed Deposit?

You have to consider the following factors before choosing a fixed deposit:

  1. Compare the interest rates of fixed deposits offered by different banks.
  2. Check if the lender is legit by examining the FD’s safety rating as given by ICRA or CRISIL.
  3. Select whether you want a non-cumulative or cumulative fixed deposit.
  4. Choose a bank that offers best customer service and has a simple process for opening an FD.

Advantages of Fixed Deposit

Fixed deposits have several benefits, some of which are:

  • Low risk: Fixed deposits have a low risk comparatively because your returns will not affect the market risks.
  • Insurance: Your fixed deposits are insured for up to Rs.1 lakh by the RBI.
  • Loan against FD: You can apply for loans of up to 90% of your FD amount at low interest rates. But the rates will be 2% more than the FD interest rate.
  • Easy liquidity: Whenever you have an emergency, you can immediately liquidate your FD account and release the money.
  • Regular income: You can earn from the interest amount which will be credited as per your choice be it on a monthly, quarterly, or annual basis.
  • Tax benefits: Investing in fixed deposits which are tax-free will help you get tax deductions of up to Rs.1.5 lakh in a financial year.
  • Senior citizens: Senior citizens are offered a higher interest rate compared to regular customers ranging from 0.25% to 0.65%.
  • You can easily earn interest on your deposits and grow your wealth.
  • The tenure for fixed deposits is flexible and starts from 7 days up to 10 years.

Who Should Invest In Fixed Deposits?

Fixed deposits offer protection for the fixed amount and give you a regular flow of income. So it is ideal for people who have a large sum of money that they want to keep safe for some time. It is also the right financial investment for those who don’t want to take risks, as the returns do not affect market risks and offer a fixed interest rate throughout the tenure.

How To Open A Fixed Deposit?

You can open a Fixed deposit account in two ways: online mode and offline mode.

Online: You can easily open a FD account with the bank where you already have an account. And you don’t have to submit any KYC as the bank will already have your account details. All you have to do is use net banking, fill up the online application form for opening an FD, and submit it.

Offline: Visit your bank and fill the application form for opening an FD account. Then submit it with all the required documents. Now deposit the required amount to your FD account and receive the FD receipt.

Tax Benefits For Fixed Deposit

  1. Individuals, Hindu Undivided Family (HUFs), and minors (investing jointly with adults) can invest.
  2. This investment has tax deduction according to Section 80C of the Income Tax Act.
  3. According to the income tax bracket, the Tax Deduction at Source (TDS) applies to the interest earnings. However, you can avoid this by submitting Form 15G (for senior citizens, it is Form 15H).
  4. According to the income tax bracket, the Tax Deduction at Source (TDS) applies to the interest earnings. However, you can avoid this by submitting Form 15G (for senior citizens, it is Form 15H).
  5. Senior citizens can claim tax deduction of up to Rs.50,000 on interest earned under Section 80 TTB.
  6. You can avail nomination facility except if it is on behalf of minors.
  7. For senior citizens, higher interest rates are offerings are available.
  8. You can transfer fixed deposit accounts from one post office to another.

How Is Interest Calculation Made For A Fixed Deposit?

FD interest calculation is on the basis of various factors, which include the interest compounding frequency depending on the bank. The interest can be monthly, quarterly, half-yearly, or annual basis.

How FD Interest Rates Vary With Central Bank policy? 

The Reserve Bank of India (RBI) provides banks with interest rates based on the current economic conditions. And when RBI updates the interest rates, So banks also change the interest rates offerings on their fixed deposits.

Also Read: Here’s What You Need To Know About Equifax And Crif Highmark Credit Scores:

FAQs On Fixed Deposit (FD) 

What is the minimum amount requirement to open a fixed deposit account?

To open a fixed deposit account, the minimum amount required can range from Rs.1,000 (in State Bank of India) to Rs.5,000 (in Axis Bank).

Can I withdraw my FD at any time?

Yes, you can withdraw your FD account at any time unless the bank has a specific lock-in period.

What’s the maximum amount that I can deposit?

There’s no maximum amount for fixed deposits. However, you can ask your lender to see if they have set any limits.

How many years will the FD double?

The fixed deposit will double depending on the interest rate offered by your bank.

Is Fixed-Deposit risk-free investment?

Yes, it is a risk-free investment and provides returns that do not affect market risks.

Is it possible to double my money in 5 years with FD?

It depends on the interest rate offered and the possibilities are high if your account remains consistent throughout five years.

Will I get monthly interest on FD?

You can earn your interest monthly, quarterly, half-yearly or annually as according to your choice.

Can Fixed Deposit of 5-year tax-saver break?

A 5-year FD will not break before the completion of the tenure period of 5 years.

What is the tenure period for a fixed deposit?

The tenure for FD ranges from 7 days to 10 years.

 Is a fixed deposit safe?

Yes, fixed deposits are safer because the returns do not affect the market risks. Also, the Reserve Bank of India (RBI) offers insurance for up to Rs.1 lakh on your fixed deposit if there is any bank crisis.

Is FD tax free?

No, FD is not tax free. However, you can get tax deductions if you choose tax-saving fixed deposits. Under these FDs, you can claim an exemption of up to Rs.1.5 lakh under section 80C of the Indian Income Tax Act, 1961.

How does a fixed deposit work?

However, in a fixed deposit, your money is in a lock for a fixed tenure in the bank. And the principal amount bears interest earnings accumulation for specific period.

What happens if I withdraw my fixed deposit before the maturity period?

If you withdraw your fixed deposit before the maturity period, you will get lower interest rates and a penalty deduction from the principal amount before it returns.

What happens to FD after maturity?

When applying for a FD, you have two options: mention that getting your amount to your account after maturity. Or mention that the amount must get renewal after maturity. So if you choose the second option, reinvestment of the amount will happen as a fixed deposit after maturity with the same tenure period and interest as the previous one. But if the information is not in the form, then the lender will notify your maturity status. And if you don’t respond within 14 days after maturity, your account will be renewed automatically.

Having any queries? Do reach us at info@buddyloan.com 

Fixed Deposit FD Account, Fixed Deposit, Interest Rates

Sidebar Widget Area

feed

Free Credit Score

Get your credit report free,

with monthly updates.

I hereby appoint Buddy Loan as my authorised representative to receive my credit information from Experian (bureau)  +More on an ongoing basis until the purpose of Pulling the Bureau Score to push the lead to the lending partner associated with Buddy Loan ("End Use Purpose") is satisfied or expiry of 6 months from the date the consent is collected; whichever is earlier.

I hereby declare that I have read, understood, and agree to the Terms & Conditions and the Privacy Policy. I allow Buddy Loans, its Lending Partners, and subsidiaries to contact me via Phone/email or any other mode of communication in loan, credit card, or any other related matters/Information/promotion.

-Less

Apply Now

Categories

  • Aadhaar Card (8)
  • Business Loan (3)
  • Car Loan (13)
  • CIBIL Score (9)
  • Credit Card (9)
  • Credit Score (57)
  • Customer Testimonial (10)
  • Debit Card (3)
  • EMI Calculators (5)
  • Fixed Deposit (6)
  • Home Loan (15)
  • Marriage Loans (2)
  • Medical Loan (1)
  • Other (5)
  • Other Loans (28)
  • PAN Card (5)
  • Personal Loan (275)
  • Personal Loan in Bangalore (7)
  • Travel Loan (3)
  • Two wheeler loan (4)

Recent Posts

  • The 5 Types of Personal Loans and How To Get Them
  • Short Term Personal Loan Benefits You Need To Know
  • Health Is Wealth: Emergency Personal Loan For Medical Urgencies(March 2023)
  • Line of Credit- Things You Need To Know Before Getting One
  • Want an Urgent Loan Even with Bad Credit Score in India? Here Is A Quick Guide!
  • Startup Business Loans to Unlock Your Entrepreneurial Dreams Now!
  • Personal Loan Benefits You Need To Know Today!
  • Instant Personal Loan Without A CIBIL Score: 5 Easy Ways To Get It!
  • Top 25 Personal Loan Online Apps You Need To Know In 2023!
  • Top 25 Aadhar Card Loan Apps You Need To Know In 2023!

You may also like

personal loan reasons india
Personal Loan

5 Reasons Why Personal Loan From Buddy Loan Serve You The Best! 

Personal Loan for Everyone!
Personal Loan

Personal Loan for Everyone!

Don't lose your good credit for bad reasons
Personal Loan

How To Get A Personal Loan Easily With More Benefits!

Apply Loan Banner

Apply Now

You may also like

Read Full Post
Axis Bank Fixed Deposits Rates
Fixed Deposit

Latest Updates On Axis Bank Fixed Deposit Rates-2023

Read Full Post
IndusInd bank fixed deposit
Fixed Deposit

IndusInd Bank Fixed Deposits Interest Rates (March 2023)

Read Full Post
HDFC fixed deposit rates
Fixed Deposit

Current Fixed Deposit Rates In HDFC Bank (March 2023)

Footer Widget Area

  • Personal Loan
    • Instant Personal Loan
    • Personal Loan Online
    • Low Interest Personal Loans
    • Personal Loan Interest Rates
    • Long Term Personal Loans
    • Short term Personal Loans
    • Pre-Approved Personal Loans
    • Personal Loan for Salaried Employees
    • Personal Loan for Self Employed
    • Personal Loans for NRIs
    • Personal Loan Eligibility
    • How to Get a Personal Loan
    • Personal Loan FAQ's
    • Secured vs Unsecured Personal Loans
    • Personal Loan on Aadhaar Card
    • Personal Loan on Pan Card
    • Simple Ways to Pay Off Your Personal Loan Quickly
    • Best Lender For Instant Personal Loan – Buddy Loan
  • Business Loan
    • Business Loan Online
    • A Business Loan That Can Expand Boundaries!
    • Personal Loan for Business
    • Ultimate Guide to Business Loan Online
    • When to Avail Business Loan Online
  • Home Loan
    • Home Loan Online
    • Tips to Follow Before Taking a Home Loan Online
    • Home Loan EMI Calculator
    • Documents Required for Home Loan
    • How does home loan enhance your credit score?
    • Is Buying a House Really Difficult? – Home Loan
    • Home Loan on Pan Card
    • Home Improvement Loan
  • Car Loan
    • Car Loan Online
    • Avail a Car Loan with Buddy Loan
    • Car Loan EMI Calculator
    • Instant Car Loan with Pan Card
    • Instant Car Loan With Aadhaar Card: Car Loan without Collateral
    • Car Loan Repayment
    • How to Get a Four-Wheeler/Car Loan Online?
  • Two Wheeler Loan
    • Two Wheeler Bike Loan Online
    • Two Wheeler Bike Loan With Aadhaar Card
    • Documents Required For Personal Two-Wheeler Loan at Buddy Loan
    • Buddy Loan accompanies you with your two-wheeler loan journey!
    • Two-wheeler loan featuring new benefits at Buddy Loan App!
    • What is the maximum amount I can get as a two-wheeler loan?
    • Make the Best Use of Two-Wheeler Loan Online!
    • Two-Wheeler Loan Features
    • How to Foreclose your Two-Wheeler Loan?
  • Medical Loan
    • Medical Loan Online
    • Unsecured Personal Loan for Medical Emergencies
    • Medical Loan: Credit Score Vs Foreclosure!
    • Instant Medical Loan With Aadhaar Card for Medical Emergencies
    • Get An Instant Medical Loan to Increase Your Credit Score
    • Medical Loan During Emergency
  • Education Loan
    • Student Education Loan Online
    • A Detailed Guideline on Education Loan for Abroad Studies
    • Points to Consider While Getting an Education Loan!
    • Borrow The Best Instant Education Loan
    • Tips for Successful Education Loan Application
    • How to Get an Education Loan Online with More Benefits?
  • Gold Loan
    • Instant Gold Loan Online
    • Gold Loan - The Highest Benefiting Personal Loan
    • Gold Loans Online During Pandemic with Easy documents!
    • Why Is Gold Loan Better Than Any Other Loan?
    • How to Apply for a Gold Loan?
  • Marriage Loan
    • Marriage Loan Online
    • A marriage loan can affect your credit score. How?
    • Points to Consider When Getting a Marriage Loan
    • How Does Marriage Loan Help Your Credit Score
    • Marriage Loan Online: Prepayment Vs Repayment
    • How to Apply for a Marriage Loan?
    • Planning to Get Married? Here’s How to Manage Your Wedding Finances
    • Wedding Loan Eligibility
    • Who should avail a wedding loan, and why?
    • Competitive rates for Buddy Loan wedding loans!
  • Travel Loan
    • Instant Travel Loan Online
    • Travel Loan – Personal Loan for Self-employed
    • Travel Loan With Highest Benefits!
    • Avail a Travel Loan at Your Convenience
    • Travel Loans to Save Money & Increase Your Credit Score!
    • Travel Loan Benefits: Tax Deduction, CIBIL Score & EMI
  • Aadhaar Card
    • Aadhaar Card
    • Bike Loan on Aadhaar Card
    • Can I Get a Personal Loan of Rs:50,000/- With Just Aadhaar Card
    • Personal Loan on Aadhaar Card: Now at Low-interest Rates!
    • Personal Loan on Aadhaar Card Without Salary Slip
    • Loan on Aadhaar Card
    • Medical Loan on Aadhaar Card
    • Instant Car Loans on Aadhaar Card
  • Pan Card
    • PAN Card
    • Instant Personal Loan on PAN Card
    • PAN Card for Home Improvement Loan
    • Avail Instant Four-Wheeler Loan Online With PAN Card
  • Eligibility
    • Personal Loan Eligibility for NRIs
    • A Complete Guide on Personal Loan Eligibility
    • Two Wheeler Loan Eligibility
  • Credit Score
    • Credit Score
    • Fixing Credit Report Errors Like A Pro
    • 7 Myths About Credit Score Report That Need To Be Cleared
    • The Anatomy Of a Credit Score
    • The Story Of A Man Who Made It To 750 Credit Score
    • How to Improve Credit Score
  • CIBIL Score
    • What is CIBIL Score
    • Travel Loan Benefits on CIBIL Score
  • Tax
    • Tax Exemptions With Personal Loan
  • Insurance
    • A Guide to Micro Insurance Policies
  • Investment
  • Mutual Funds
  • Financial Planning
  • About Buddy Loan
  • Features
  • Privacy Policy
  • Terms & Conditions
Buddy Loan Blog © 2020. All rights reserved