What Are Fixed Deposits & How To Save Efficiently With Them?

If you are hoping to save money in order to receive double the fixed amount, you can invest in Fixed Deposits and ensure safety. With the availability of different investment options, Fixed Deposits are, on a comparative basis, relied upon as ‘convenient investment instruments’ in the banks today. Diving into terminology, they are one among the many schemes related to investments that freely allow you to deposit your savings for a fixed tenure along with a uniform rate of interest.

These are deposits which are offered by banks and Non-Banking Financial Institutions (NBFCs). You are also provided with a lock-in period, and the principal amount is deposited on a cumulative basis. After a specific period, the interest is added to the principal amount, in turn, giving you an incremental growth of interest.

Top banks providing Fixed Deposits for below INR 2 crore,

Banks General Citizens Senior Citizens
State Bank of India 2.90% – 5.40% 3.40% – 6.20%
ICICI Bank 2.50% – 5.50% 3.00% – 6.30%
HDFC Bank 2.50% – 5.50% 3.00% – 6.25%
Punjab National Bank 3.00% – 5.25% 3.75% – 6.00%

Top NBFCs providing Fixed Deposit rates,

Banks Tenure General Citizens Senior Citizens
LIC Housing Finance 12 – 60 months 6.00% – 6.10% 6.25% – 6.35%
PNB Housing Finance 12 – 120 months 6.65% – 7.00% 7.15% – 7.50%

 

ICICI Home Finance 12 – 120 months 6.00% – 6.35% 6.25% – 6.50%
Mahindra Finance 15 – 40 months 6.80% – 7.30% 7.10% – 7.60%

In order to avail of a Fixed Deposit, reach out to the nearest bank within your proximity and invest all of your savings in the form of a Fixed Deposit. With regards to Citibank, a Fixed Deposit is simple and requires minimal documentation. You can consider fulfilling the needful via the online portal or through an in-person visit.

Benefits of investing in a Fixed Deposit Account,

  • Offer higher rates of interest, with comparison to a savings account
  • They cater to instruments of safety with affordable interest rates and guaranteed returns
  • Zero risk of principal
  • You have the allowance to opt for ‘periodic interest payouts’ – an additional source of income
  • Returns are not affected by market fluctuations

Given below are certain tips to efficiently invest in Fixed Deposits,

Draw a comparison and choose a viable option

Refrain from limiting yourself to the bank with which you already have a savings account. Instead, opt for one that offers you a guarantee of maximum rates of interest to double your savings.

Plan accordingly

Irrespective of whether you are planning for a family wedding or home renovation, jotting down a detailed structure can help you decide in the longer run. When you plan on investing in a Fixed Deposit Account, the longer the tenure, the higher the returns. To help meet these demands, you need to plan the tenure of the deposit accordingly. To make things easier, you can use a Fixed Deposit Calculator anytime.

Pick any two

When you invest in a Fixed Deposit, you have two options: reinvest/ withdraw. If you wish to maximize your Fixed Deposit earnings, be smart enough to reinvest. Once you reinvest, you have the benefit of compound interest, which gives you better returns.

Just split it

This might seem absurd but comes with a bunch of advantages. The Tax Deductible as Source (TDS) is charged at 10% on your Fixed Deposits if your income goes beyond INR 10,000. But the benefit that comes into the picture is that if you split the deposit, the chances of TDS are not applicable. In case of an emergency, you do not have to break your Fixed Deposit or lose interest.

The Fixed Deposit income will be clubbed along with yours

Do not have a preconceived notion that you can avoid taxes if the Fixed Deposit holds the name of your spouse/ children. Even though you will not be charged on the money given to your spouse/ child, if it is invested, the remaining income is added to the income of the giver and is further taxed. For instance, if the husband’s Fixed Deposit is in the name of his wife, the earned interest will be treated as his income.

With an in-depth analysis of the banks providing Fixed Deposits, benefits, and tips, you will have a clearer picture of what to opt for.

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