Looking for an investment that guarantees return yet involves low risk? In case you are wondering if good return and low-risk appetite are oxymoronic, a fixed deposit proves you wrong. A fixed deposit (FD) is a run-of-the-mill investment scheme provided by both banking and non-banking financial companies (NBFCs). FD offers higher rates of interest as compared to that of a savings account. It even offers special interest rates for retirees, for instance, ICICI Bank FD rates range from 3.25% to 6% for senior citizens as compared to 2.75%-5.50% for others. It’s a great way to lock your money and let it grow at the same time.
Nitty-gritty of Fixed Deposit:
Your FD account generates more interest rates than your savings account. Once your money is locked at a particular rate of interest, your Fixed Deposit (FD) continues to generate the same interest rate throughout the tenure, irrespective of any future changes.
Any Indian resident, including minors and Hindu Undivided Family, can opt for a fixed deposit account
You cannot withdraw money before the maturity of the account. However, a partial withdrawal of the money deposited is allowed in case of an emergency. This, however, will draw a penalty
Your existing savings account is required to be interlinked with your FD account. This helps you transfer money to your FD account from your savings account and vice versa.
You are required to choose two nominees for your FD account
You can also utilise your FD account in time of emergency. You can take a loan against your FD
FD offers different interest-payment options, zero market risk and tax levied only on the interest amount. Your FD account generates more interest rates than your savings account. For example, the ICICI savings account interest rate is capped at 3.50%. Whereas, ICICI bank FD rates range up to 5.50%.
Different FD Schemes Available:
Before you embark on an FD Scheme of your choice, a clear understanding of the same will help make an informed decision. The following are some options you can choose from:
Corporate Fixed Deposit: A corporate fixed deposit is an FD held by organisations other than banks. This is also called Company FD. This sometimes generates higher returns.
Standard Fixed Deposit: This scheme of FD is the standard form of FD where you invest a lump sum amount with a bank or an NBFC for a fixed period of time. You withdraw the principal amount and the interest earned only after maturity. Here, the financer has fixed the rate of interest.
Senior Citizen Fixed Deposit: This scheme is meant for citizens above the age of 60. Here, the individual enjoys flexible tenure and higher rates of interest.
Tax-saving Fixed Deposit: If you are looking for a tax-saving instrument and also ensure a guaranteed return, this is what you are looking for. However, here the amount is capped at Rs. 1.5 Lakh per annum with a lock-in period of 5 years.
Cumulative Fixed Deposit: In a cumulative fixed deposit scheme, the interest is compounded quarterly, half-yearly or yearly. This helps you get a considerable amount of post-maturity of your account.
Non-cumulative Fixed Deposit: Here, the interest generated is paid out on a monthly, quarterly or half-yearly basis. If you are looking for a regular source of income, this should be your go-to scheme.
Flexi Fixed Deposit Plans: Here, the money seamlessly moves from savings to FD and vice versa. Albeit, you need to connect your savings account with that of your FD account. This scheme allows you to earn higher rates of interest. It also provides liquidity.
NRO Fixed Deposit Account: NRO FD accounts are for Non-Residential Indians. The NRI individual can repatriate the interest earned from this account in its entirety but the principal amount has a limit attached to it.
NRE Fixed Deposit Account: NRIs can invest their income earned overseas in this FD scheme. Here, both the principal and the interest are allowed to be converted in the local currency.
Conclusion:
If opening a Fixed Deposit (FD) account tops your list now, it is very important to understand the various FD schemes available before you pick one for yourself. You can always check ICICI Bank FD Rates and then choose accordingly. This article should help you take rich-information backed decision.