A Fixed Deposit is often considered the most widely preferred investment instrument. Such an option lets you deposit a lumpsum amount for a particular period with your preferred bank. The deposited sum then earns interest at a fixed rate that is decided when you open the FD. They are thought ofas the safest investment option and are known to offer good returns.
However, before you open a Fixed Depositwith your chosen bank, you need to know certain essential things. These include:
Interest rates on FDs
As mentioned, when you open an FD, you earn interest on the deposited amountat a fixed rate. This interest rate varies between banks. It also depends on the amount you deposit and the investment period. Hence, when opting for an FD, it is a good idea to compare the FD interest ratesoffered by various banks. Then, select a reliable bank thatprovides the benefit ofcompetitive rates on their FDs.
Minimum deposit amount
The minimum and maximum deposit amount varies across banks. Therefore, you should check the amount before opening an FD with your preferred bank.
Account opening process
Today, you can conveniently open an FD anywhere and anytime using the Banking app. The process is alsoquick. To open an online FD, just open a Savings Account with your bank and make sure you have sufficient balance in your account to open the deposit.
Tenure
FDs let you deposit a sum for a fixed tenure. The minimum and maximum tenure typically varies across banks. Hence, go through the tenure options offered by your bank. Then, choose a tenure based on your investment goals. This tenure also usually affects the Fixed Deposit interest rates.
Type of payout
When opting for this Term Deposit, you can choose between two different payouts, i.e., Cumulative and Non-Cumulative. If you want a regular income annually, monthly, half-yearly, or quarterly, select a Non-Cumulative FD. Alternatively, if you want to save for the long term, you can pick a Cumulative FD.
Nomination
When you open an FD using Online Banking, you can add a nominee to your account.
Cost of premature withdrawals
During emergencies, banks usually let you withdraw your FD before the date of maturity. However, they may charge a penalty. This penalty fee usually differs across banks.
Interest rate for senior citizens
Banks generally offer a higher interest rate on FD in the case of senior citizens. Hence, if you are a senior citizen or opening an FD for a senior citizen, you can check the interest rates offered by your bank.
Conclusion
An FD is considered a safe investment in India. However, before you open this deposit, keep in mind the mentioned tips.