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Learning About Terms And Conditions Of Fixed Deposits

Updated On Oct 14, 2021

Fixed deposits are one of India's most popular investment options. As a result, millions of Indians opt to save their money in a fixed deposit account. An investor must be aware of the different types of fixed deposit schemes as well as the variables to consider when selecting a fixed deposit scheme. To obtain the maximum returns on your money, you need to find the correct fixed deposit plan. You can read about the terms and conditions of fixed deposit schemes in this article. 

What are Fixed Deposits?

Fixed deposits are low-risk investment vehicles that allow policyholders to earn more returns than they would in a traditional savings account. The income generated on online fixed deposit amounts is compounded on a regular basis. The rate of interest on fixed deposits varies depending on the banking institution. The majority of fixed deposits include a lock-in period during which the investor is unable to withdraw funds.

What are the Different Terms And Conditions Of Fixed Deposits?

Here are certain terms and conditions of fixed deposit schemes. 

  • Eligibility Criteria - Indian residents, NRIs, senior citizens, minors, individuals or joint investors, sole proprietorship, partnership firms, societies or clubs and companies are eligible for a fixed deposit.  
  • Investment - The sum can only be deposited once. You can transfer any additional cash to a different account.
  • Interest Rate - The interest rate is higher than that of a savings account.
  • Tenure - The time span can be anywhere from seven days to ten years.
  • Plan Renewal - Fixed deposit accounts can be easily renewed.
  • Withdrawal - Withdrawals are not permitted prior to the maturity date. In the event of an emergency withdrawal, the person must pay a penalty.

What are the Benefits of a Fixed Deposit?

Opening fixed deposit accounts has various advantages.

  • Guaranteed Returns - Returns are guaranteed, which is one of the key advantages of investing in a fixed deposit account. This means there are no risks as compared to other investment instruments, such as mutual funds. At maturity, a fixed rate of interest will be paid on the investment amount.
  • Simple to Open - In only a few minutes, you can open an FD account. You can apply for it either online or at your local bank.
  • Higher Rate of Interest - Fixed deposits provide consumers a higher rate of return than savings accounts or other types of term deposits. 
  • Flexible Term - You can start a fixed deposit account for a period ranging from seven days to ten years.
  • Multiple FD Accounts - You can open multiple FD accounts at the same time. If you want to make a greater investment, you can always open a new FD account.
  • Tax Benefit - Section 80C of the Income Tax Act of India allows you to claim a tax exemption of up to Rs 1,50,000.

Take Away

A fixed deposit scheme is a safe investment option that helps you earn good interest over a fixed period. You can invest for a suitable period of time after assessing your needs and requirements. Furthermore, a financial advisor can be consulted to get a better understanding of the benefits which can be availed through a fixed deposit scheme. 

You may also like to read - Do You Need A Whole Life Plan Or Is Term Life Cover Enough?

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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