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Types of Fixed Deposits: From Standard FD to Tax Saving, Flexi, Callable, Non-callable FDs explained
Fixed Deposits are one of those investment instruments that are not only risk-free but come with assured returns. Fixed deposits offer a return between 3 to 9 per cent depending on the tenure and interest rate being offered by the bank. Since the interest rates for FDs are pre-defined, you get the return as per the rate when the investment was made. So, it gives guaranteed returns. However, to make most of your investment into fixed deposits, you must choose wisely from several types of fixed deposits available in the market. The fixed deposits which allow premature withdrawal is known as callable fixed deposit while the one that doesn't allow depositors to withdraw funds early is known as non-callable.
Types of Fixed Deposits: Standard FDs
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As the name suggests, the Standard Fixed Deposit is the basic type of FD where you park your money for a fixed term ranging from 7 days to 10 years. The interest rates are pre-defined and are higher than the regular savings account. You can also get loan and overdraft facilities against the standard FDs. (Pixabay photo)
Types of Fixed Deposits: Tax-Saving FDs
The tax-saving fixed deposits come with a lock-in period. This means, it cannot be withdrawn before that tenure. Also, loan and overdraft facilities are not available against tax-saving FDs. This is for those people who wish to claim tax exemptions of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. (Pixabay photo)
Types of Fixed Deposits: Cumulative FDs
As the name suggests, Cumulative FDs provide returns as per the compounding formula. The interest on these FDs gets compounded as per the interval of the investor's choice and is added to the principal amount. The return is paid on the maturity of the FD. (Pixabay photo)
Types of Fixed Deposits: Non-cumulative FDs
Non-cumulative FDs allow investors to get payment of the interest at regular intervals. It's a good choice for those who look to invest for a regular income. They can get the interest paid in their bank accounts monthly, quarterly, half-yearly and yearly basis. (Pixabay photo)
Types of Fixed Deposits: Senior Citizen’s FD
Senior Citizen’s FD is for people aged 60 years and more. Banks offer a higher return to senior citizens than to non-senior citizen FDs or standard FDs. (Pixabay photo)
Types of Fixed Deposits: Flexi FDs
Flexi FDs come with the convenience and flexibility of an FD as well as a savings account. They have features of both the products and give benefits of FDs, this means you get the higher interest rates of FDs plus the liquidity of savings accounts. (Pixabay photo)
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