Types of Fixed Deposits in India

If you have excess cash in the bank, investment is the first thing you should do. We are facing inflation, debt, unknown risk, and limited capital in this day and age. It is vital to invest in securities. You can invest in securities to ensure your savings grow at a higher rate than if you keep them in savings accounts that offer low interest payouts.

Fixed deposit accounts (FD) or recurring deposits (RD) are more trustworthy than mutual funds and stocks when it comes to investing. Market-linked products are subject to market risk. However, FD returns are not affected by market conditions. It offers a perfect combination of flexibility, liquidity, and savings.

Features of the FD:

  • Anybody can open an FD account.
  • Tenure periods range from 7 days up to 10 years
  • A minimum deposit of Rs.10,000 is required for general customers. For minors, the minimum deposit required to open an account is Rs.2,000
  • You can withdraw only a portion
  • You can choose to have interest paid quarterly or monthly.

Here are some types of fixed deposits:

  1. Normal Fixed Deposit: This account allows you deposit money for a fixed term that can vary from 7 days to 10 years. Normal Fixed Deposit: This account offers a higher interest rate than regular savings accounts.
  2. Flexible Fixed deposits: Customers have flexibility in terms of tenure with flexible fixed deposits. This account combines a fixed deposit and recurring/savings accounts. Customers can enjoy the high-interest rate FD benefit and liquidity advantage of a savings account through the merger. You can withdraw a specified amount from a Flexi fixed bank account if it is linked to your savings.
  3. Cumulative: This means that there is no interest payment over a quarter or bi-annually, nor yearly. The compounding interest payout can only be accessed by customers at the end of their tenure. This fixed deposit account allows you to significantly increase your savings.
  4. Non-cumulative: If you open a fixed-deposit that is not cumulative, the bank will pay you interest on a regular basis. You can receive interest monthly, quarterly, semi-annually or annually. This is the best option for those who are looking for regular income in retirement, according to veterans.
  5. Senior Citizens Fixed Deposit: The fixed deposit rate for seniors in India is generally higher than the rates offered to general customers. If you are over 60 years old, lenders will offer an additional rate at 0.50% on current interest rates. Senior citizens have the option of choosing to receive interest payments on a regular basis or the amount at maturity. Senior citizens have a 7.4% interest rate on FDs.
  6. Fixed Deposit that saves tax: This FD account allows you to save taxes under Section 80C. This allows you to receive a tax benefit of up to Rs. 1.5 lakhs per year. The lock-in period for tax-saving FD is five years. All interest earnings are subject to tax. Returns will be earned at a rate between 6% and 7%. You can’t withdraw partial. You can only invest in tax-saving FD for Indian citizens, senior citizens, HUFs, and NRIs.
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