Everything You Need To Know About Fixed Deposit Schemes

Most people choose Fixed Deposits (FDs) as their investment option. Even though FD offers a fixed return and its return rate doesn’t increase or decrease as other financial instruments, it offers the highest security. The best Fixed Deposit plans that banks offer come with various perks. 

What is a Fixed Deposit? 

Fixed Deposits are investment instruments banks offer in which customers can invest funds for a certain period. They get multiple tenures from which they can choose the period suitable to their financial goal. Tenure also signifies the lock-in period of your FD. It means customers can only take out funds after the lock-in period ends. If they do, a penalty will apply to their FD account. 

Types of Fixed Deposit Plans

Following are the types of Fixed Deposit plans that you can choose for yourself: 

- Regular Fixed Deposit plan 

Regular Fixed Deposit plans have tenure from a minimum of seven days to a maximum of 20 years. Banks fixed these tenures, but it is up to the investor to choose between the available tenure. The interest rate remains the same as per RBI regulation and stays constant throughout the tenure. Some banks give relaxations on the minimum balance rule if customers have a Fixed Deposit of a set amount. 

- Flexi Fixed Deposit plan

Flexi Fixed Deposit plans have sweep-in and sweep-out facilities. In this, FD account links to your savings account. If you are low on cash, you can use the sweep-out feature to transfer the money to your savings account without breaking the Fixed Deposit. You can limit your savings account this way, and the surplus amount will go to the Fixed Deposit plan, and you will receive interest as per the Fixed Deposit interest rate. 

- Tax saving Fixed Deposit plan

These plans offer tax rebate benefits under Section 80C of the Income Tax Act 1961. You need to pay the amount in a lump sum while opening the FD account. The tenure of tax saving fixed deposit is five years, and breaking it in between is not allowed. When filing income tax returns, you can use the Fixed Deposit slip and get the tax benefit on your taxable income.  

- Customer-specified Fixed Deposit plans

These are some of the best Fixed Deposit plans that cater to senior citizens and women. Almost all banks offer a modified interest rate on Fixed Deposits to senior citizens, whereas some schemes benefit women. Other than this, all the other features are the same as the regular Fixed Deposit plan. 

- Regular income Fixed Deposit plans

With this Fixed Deposit plan, customers get the payout at regular intervals until the tenure ends. This payout amount is deducted from your maturity amount, but if you are the kind of person who is dependent upon the additional income, it will benefit you. 

- Special Fixed Deposit plans

These FD plans have different tenures than regular ones. You cannot withdraw money from your Fixed Deposit until the tenure end but can earn higher interest on your invested amount. 

Who should invest in Fixed Deposits schemes? 

The following people should invest in the Fixed Deposit scheme:

  • People with low-risk or no-risk appetites should invest in the Fixed Deposit scheme
  • Some of the best fixed deposit plans often cater to women or senior citizens by offering them modified interest rates. So senior citizens and women can earn fixed returns from their investments by choosing an FD investment.
  • People who do not mind investing their money for a longer period or have long-term financial goals. 
  • Customers who do not mind getting lower returns on their investment if it ensures the safety of the capital and guaranteed returns. 
  • People who have surplus money lying around or are not in immediate need of money should invest in the Fixed Deposits scheme. 

Conclusion

Fixed Deposits are a great option to lie on if you do not have any risk appetite. The amount that you get in return is fixed. So you can plan your other financial decisions accordingly. It is also an idea for customers who have long-term financial goals. 

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