Fixed deposits are when a sum of money is locked for a stipulated time. Within this given period, it matures and grows according to the chosen interest rates. This fixed deposit scheme is a kind of future investment; hence, people usually opt for banks that offer higher rates. Let us now explore the various benefits of FDs.
● Higher Interest Rates
Fixed Deposits offer higher rates than savings accounts; hence, securing your hard-earned money in an FD scheme is much more advisable. Check and compare the rates to get the best option. For instance, IDFC FIRST Bank provides 8.00% for normal citizens and 8.50% for senior citizens, which is higher than several banks.
● Easy Liquidity Options
Sometimes, in emergencies, you must draw the money before the tenure. This is absolutely possible, as FDs allow you to withdraw the amount whenever needed. However, you might have to pay nominal charges for it. However, the rules for senior citizens are a bit different. There will be no penalty for them even on early withdrawals. Thus, it is advisable to use this advantage only for urgent requirements.
● Offer Assured Returns
This is one of the major benefits of fixed deposit, as the interest rates promised do not change. In this case, the rate cannot be affected by external conditions like market rise and fall, recession, inflation, etc. The interest you have been promised is exactly what you will receive after the given period. This is another reason people are more inclined to opt for FDs. Additionally, the FDs are insured by DICGC up to 1.5 lakhs. Hence, you do not have to worry about the security of your schemes.
● Various Tax Benefits
This is often considered as a great tax-saving tool. According to section 80C of the Income Tax Act, you can claim up to 1.5 lakhs against the scheme from your taxable income in a year. This is termed the tax-saver FD, which comes with a lock-in period of five years. However, you must remember that in this case you cannot withdraw the money under any circumstances.
● Loan Application Services
In case of any emergency, you do not always need to withdraw your money prematurely as it can hinder your profits. Rather, you can opt for loan benefits against the fixed deposit India with the overdraft facility and continue to enjoy the FD interest. As most of your FD amount is considered collateral for the loan, the loan interest is quite low considering other unsecured loan schemes.
● Flexible Tenure Options
The scheme is flexible since the principal amount and the lock-in period are up to you. The tenure offered is from 7 days to 10 years, and the depositing amount is absolutely at your convenience. This enables everyone to avail themselves of the benefits of fixed deposits. Moreover, there are also monthly or quarterly interest payout options.
Summing Up
At least one fixed deposit is a must for everyone, from salaried to retired people. As previously mentioned, this is a future asset; hence, it can help you in times of need. However, make sure you are choosing the best offers from reputed banks to avoid any kind of fraud.
