Fixed deposits are one of the best and safest ways to perk your idle money. This type of investment is free from market volatilities hence the returns are near to certain. A fixed deposit is primarily used as long term investment and generally, investors keep themselves invested for a few years. The interest rate may differ from bank to bank but it would surely be higher than a savings account. A fixed deposit can be the best investment avenue if you don’t want any risk on your hard earned money and you are satisfied even if the returns are lower than some other investments opportunities. The interest rate on the investment remains the same throughout the tenure. As the name suggests, it is never advisable to withdraw your investment before maturity. If you do so, you will receive a nominal interest rate on your investment.
How to Start a Fixed Deposit
Starting an FD account is not a difficult task. One can easily start an FD account with any preferred bank by following a few simple steps. An FD account can be opened both online and offline. Here are the steps to start an FD account.
Step 1- Figure out the amount you want to save.
Step 2- Finalise the financial institution where you want to start your FD account.
Step 3- Finalise the FD plan and the tenure of your FD.
Step 4- Find the application form online or get it from the branch office and fill the application form.
Step 5- Issue a cheque of the amount of your FD.
Step 6- The amount will be transferred to the FD account through the RTGS.
Step 7- In the next step you are to submit the required documents like identity proof, address, signature, proof of the nationality, age, etc.
Once all the formalities are successfully completed, your FD account will be started. You can find the exact returns after maturity by using an FD calculator.
FD Interest Rate of Top Banks in 2019
The interest rate of FD may differ from bank to bank and also from tenure to tenure. Generally, longer tenure attracts a higher interest rate. Along with the same, the interest rates are higher for the fixed deposits invested by senior citizens. Here are the interest rates of different banks on FDs.
|Bank||FD Rate of Interest||Senior Citizen FD Rates|
|SBI Fixed Deposit||5.75% – 6.85%||6.25% – 7.35%|
|HDFC Bank Fixed Deposit||3.50% – 7.40%||4.00% – 7.90%|
|ICICI Bank Fixed Deposit||4.00% – 7.50%||4.50% – 8.00%|
|Axis Bank||3.50% – 7.55%||3.50% – 8.50%|
|Kotak Bank||3.50% – 7.30%||4.00% – 7.80%|
|Citibank||3.00% – 7.00%||3.50% – 7.50%|
|PNB||5.75% – 6.75%||6.25% – 7.25%|
|HDFC||7.70% – 7.70%||7.95% – 7.95%|
|PNB Housing Finance||8.25% – 8.45%||8.50% – 8.70%|
|Bajaj Finserv||8.00% – 8.75%||8.35% – 9.10%|
|RBL Bank||5.00% – 8.05%||5.50% – 8.55%|
Things to Consider Before Investing in FDs
Though FDs are considered the safest forms of investment, there are some points one should know before step forward towards FDs.
The Interest Rate
The interest rate of FD is fixed throughout the tenure of your FDs. The interest rate of FD is always less than other investment vehicles such as mutual funds, investment in shares, gold investment etc.
The liquidity of your fund minimizes when you invest in FDs. If you withdraw your investment from FD before maturity, you will get very little returns. Hence the investment in FD cannot be used during financial emergencies.
FDs are offered by banks, corporates, and HFCs. If you are planning to invest in corporate FDs, you are to find the credit rating of the institute where you want to invest your hard earned money. Always opt for a corporation which has high ratings like ‘AAA’ or similar.
Most of the financial institutes keep a cap of a minimum amount that can be invested in FD. This amount may vary from bank to bank. However, there is no maximum limit that can be invested in FDs. So before you start investing, you need to know if there are any such limitations.
Investment in FDs attract tax rebate and people use FDs to save income tax. But banks deduct tax at source (TDS) at the rate of 10 percent if the interest income is more than Rs 10,000 in any particular financial year.