Get a birds view of Fixed Deposits

Fixed deposit or FD is known to be the kind of financial instrument needed for steady economic growth. It is provided by the investors at a high interest rate when compared to the regular savings account. FD has a specific maturity date. It does not require creating a separate account. The name given to FD is time deposit or term deposit in Canada and other places like Australia, New Zealand and USA. FD is known as bond in India and United Kingdom. This is the kind of safe investment you can have in life. You have the option of term deposit in India and Pakistan. This is used in denoting higher investment class.

Know the traits of fixed deposit today

In case of Fixed Deposit, there are varied levels of liquidity. In matters of FD, you cannot withdraw money before the maturity date. There are certain banks to offer additional services to most of the holders of FD. In this respect, one can take loans against the FD certificates at the most competitive rate of interest. However, it should be kept in mind that at times the bank may offer low interest rate, at times of economic instability. The rate of interest can vary between 4 to 7.25%.
The FD investment is safe when compared to the post office scheme. In this case, things are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). It is true that DICGC will guarantee an amount of about ₹ 1, 00,000 based on per deposit per bank. They are likely to offer even income tax benefits and the rest of the wealth tax benefits.

Fixed Deposit details that you must know

  • For somebody who do not want to take chance of uncertainty in regards to thereserves, Fixed Deposits is perfect choice for such individuals.
  • The depositarrangements offered by maximum banks can be availablefor the tenure ranging from short span till 7 days till 10 years long. Few banks, like State Bank of Patiala, the Ratnakar Bank and IDBI Bank offer FDs for the span of 20 long years too.
  • The interest that is calculated on FDs is usually compounded on quarterly basis of the same.
  • EpisodicPayouts quarterlyor monthly are obtainable.
  • Most banks offer 0.25% – 0.50% additional to senior peoples.
  • Bank readily offers Rs 1 cr and probably above too.These can be termed as BulkPayments.
  • Banks offer Overdraft or Loan/ against the sum available for Fixed Deposit.
  • TDS @ 10% is subtractedfrom the amount of transaction if the Rs 10,000 in monetary year in any bank

There are 2 basic types of Plans in FD

  • One such is Traditional: here one can well get facility to pay the interest on a specific period on a monthly basis and sometimes annually or even quarterly basis too. The entire decision is completely based on the person selecting the plan.
  • Cumulative Plans: with this plan the interest here is usually calculated as compounded on quarterly basis- selected by you only. This one can also pay during the time of final maturity too. This though varies from 6 months till 10 odd years.

Fixed deposits and Inflation details

Many are not at all aware of the FD and the interests varies from time to time – as per the calculation quarterly, monthly and sometimes on annual basis too. This FD do not deliver accurate and positive rate on the return. This is the perfect and actual return on the investment made after deduction of increase rate.

Tax details

The depositors will pay taxes to the bank on interest that is earned by them on the FD as per the slab. That if your FD exceeds more than 10,000 during the running financial year then the bank would sure to deduct an amount as per the ter. Note if you are not eligible for the same then do submit 15G and moreover any senior citizen can well submit 15H for the same.

For the loan disbursement: the bank with whom you have the FD do not charge any kind of processing fees and moreover there is no penalty too. Well to mention – Axis bank delivers up to 85% of the loan based on the value of FD. Other than this SBI, ICIC and HDFC do give the same till 90% of FD value.

Premature Withdrawal

One must know the fact that if your FD is for 390 days and your interest is 7.5% and if you wish to break the same within 180 days then the interest would be reduced to 6.8%. And moreover over you would also be charged a Penalty of 0.5% – to 1% on 6.8.
Auto renew: During the opening of FD with all banks one can add and probably can modify the details of the Nominee any point of time.

POST OFFICE – FD

Now you can also open an FD account with the Post office withboth cash andCheque mode. The transfer mode is similar to other banks too. The minimum amount to be deposited is rest 200 and one can close as premature only after 6 months completion. This is applicable from the date of account opening .the maximum and the minimum span is of 1 yr., 5 years respectively.

Now it is a known fact that this Fixed deposited is a mode or instrument of saving for any individual or family, it is a must. Every individual is encouraged to keep their hard earned amount in FD so that people can well go ahead and solve their issues in terms of financial crisis. Do remember the above given points so that people can well get a brief idea as to where to deposited the amount be it bank, Corporate, Post office etc. so that – money can be safe . Onemost too remember that do only open FD account if you have to take loads as many banks checks that amount and then only disburse the loan of the individual.