Fixed Deposit

Fixed deposits are investment instruments offered by banks and non-banking financial companies, where you can deposit money for a higher rate of interest than savings accounts. You can deposit a lump sum of money in fixed deposits for a specific period, ranging from 7 days to 10 years. Once the money is invested with a reliable financier, it starts earning an interest based on the duration of the deposit. Usually, the defining criteria for FD is that the money cannot be withdrawn before maturity, but you may withdraw them after paying a penalty.

Features of Fixed Deposits

• Fixed deposits enable investors to earn higher interest on their surplus funds.
• You can deposit money in a fixed deposit account only once, but to deposit more money, you need to create another account.
• Though liquidity in fixed deposits is lesser, you can look for higher rates of interests, which are higher in case of company fixed deposits.
• Fixed deposits can be easily renewed.
• Tax is deducted at source, from interest on Fixed Deposits as applicable, as per the Income Tax Act, 1961.