Fixed deposits are long-term investment instruments that help investors save some of their income for the rainy day. As one of the most traditional and safe tools for investing, many people would like to save wealth and save taxes. Yes, it is eligible for tax deduction under 80C. They also offer interest rates compared to savings accounts.
You can open an FD account with almost all the banks in India. Interest rates on FD schemes can increase up to 9% and this usually depends on market trends. However, once you add money to your FD account, the interest rates remain the same throughout the period. Therefore, promoting financial assets without burning due to market volatility and related risks is perfect. As with name, maturity can not be withdrawn before maturity. But in emergencies, you can lower it for a lower interest rate.
Who should Invest in Fixed Deposits?
If you are a resident individual, HUF, NRI, firm or charitable trust, you can open an FD account with any bank in India.
Fixed deposits are a good option for those who have some extra amount, which they do not need to use at that time. It ensures the protection of capital and the same flow of income. However, refund is not inflationary. If you are at risk for some degree-if you do not want to have equity exposure, you have an FD. Debit mutual funds also offer these goals and offer high returns. Even if it is more tax-efficient than FD, the returns on the return market depend on them.
Compare Interest Rates from different Banks
The interest you receive from your FD depends on the selected amount and duration. With higher amount the account will earn more interest income and vice versa. Although the latest FD rates (as of April 2018) are listed below, you can use the FD calculator to calculate interest for certain conditions.
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BANK |
Normal Citizens |
Senior Citizens |
|
5.25% – 6.25% |
6.00% – 6.75% |
|
|
3.50% – 6.75% |
4.00% – 6.50% |
|
|
ICICI Bank |
4.00% – 6.75% |
4.50% – 7.00% |
|
Axis Bank |
3.50% – 6.85% |
3.50% – 6.75% |
|
3.50% – 6.80% |
4.00% – 7.30% |
|
|
4.00% – 7.50% |
4.50% – 8.00% |
|
|
4.50% – 6.65% |
4.50% – 7.00% |
|
|
4.25% – 6.75% |
4.25% – 7.25% |
|
|
4.00% – 6.50% |
4.50% – 7.00% |
|
|
4.00% – 6.60% |
4.50% – 7.10% |
|
|
4.00% – 6.60% |
– |
|
|
4.00% – 6.50% |
4.50% – 7.00% |
|
|
4.00% – 6.60% |
4.00% – 7.00% |
|
|
4.20% – 6.50% |
4.70% – 6.00% |
|
|
4.75% – 6.60% |
5.25% – 7.00% |
|
|
5.00% – 6.75% |
5.50% – 7.25% |
|
|
4.50% – 6.50% |
5.00% – 7.00% |
|
|
6.00% – 6.80% |
6.50% – 7.30% |
|
|
3.00% – 5.75% |
3.50% – 6.25% |
|
|
3.00% – 6.25% |
3.50% – 6.75% |
Features of Fixed Deposits
- Long Term Investments: The main goal of the FD is to keep your money safe for a longer period of time by earning an interest.
- One-time Deposit: You only need to add money (outstanding payment) only once. If you have extra money and you do not need it in the future, a good way to keep them safe is to open a FD.
- Fixed Deposit Receipt: After you make a deposit, you get an FD receipt. You can also request an electronic copy. Keep this safe, you must submit money for the withdrawal or renewal of post mortgage for the account.
- Interest payable: On the request of the depositor, monthly interest rates are paid quarterly. For example, you can request to credit interest on a specific savings account in your name.
- Tax-efficiency: You can choose tax-saving FD and Rs. 1.5 lakhs to save on income taxes Income taxable and tax is deducted as per Income Tax Act, 1961.
Advantages & Disadvantages of FD
- Advantages
Low risk: The FD account is a safe place to protect your money, where market risks can not be invested or touched. For deposits of Rs. At 1 lakh, your money is protected by all the media.
Loan against FD: In emergencies, people are dependent on investments which can be easily delayed and FD is one of them. However, you can take a secured loan against a FD (up to 90% amount) on low interest. For example, most banks keep interest on loans against FDs, 2% higher than their existing FD rates.
Steady Income: You can get the same interest payout throughout your life, ignoring market volatility. Monthly or quarterly interest is collected every month according to your requirement.
More for Senior Citizens: Nearly every bank gives high interest rates to senior citizens. Large scale retirees appeal. For example, SBI gives 6-6.75% returns to senior citizens, which gives 5.25-6.25% to regular customers.
Tax Perks: As mentioned above, you can invest in a tax savings deposit for five years to avail 80 tax benefits.
Opinion to reinvest: You can request the bank to transfer it to a new FD account, where they will get a higher dividend.
- Disadvantages
Returns are not inflation-beating: Everyone knows that the FD is not the best option for getting maximum returns. For example, there are other investment routes such as the Equity Linked Savings Scheme (ELSS) which can virtually double your money in the same period of time while saving your income tax.
Less liquidity: If you have withdrawn the FD before maturity, you will lose many of its benefits. You will not be able to get only part of the interest committed, but the bank will also charge a liquidity charge. Even partial withdrawals have similar results.
Lower tax benefits: While returning 80 crores, the returns you get are taxable. Total interest is Rs. If more than 10% TDS is deducted on FD refund. 10,000 in financial year Only the primary account holders can avail tax benefits for joint accounts.
How to open an FD & the documents required
- Online
Starting FD is a lot easier and quicker nowadays. If your internet banking account is active then you can open it by filling out an online form from your account. Your customers (KYC) need to know that the bank has already added it.
- Offline
You can go to a bank and submit an application form. Submit the completed form with ID proof, residential proof and passport size photos – see table. Once you deposit the deposit, they will give you the FD receipt. Once you have matured, you have to redeem or re-invest.
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Identity Proof |
Address Proof |
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Passport |
Passport |
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PAN card |
Telephone bill |
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Voter ID card |
Electricity bill |
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Driving license |
Bank Statement with Cheque |
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Government ID card |
Certificate/ ID card issued by Post office |
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Photo ration card |
|
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Senior citizen ID card |