Fixed Deposits (FDs) are a popular savings tool in India, offering a secure and stable way to grow your savings. With a variety of fixed deposit options available, it's essential to understand the different types to choose the one that best suits your financial needs.
Regular Fixed Deposit
A regular fixed deposit is the most common type of FD, where you deposit a lump sum for a fixed tenor at a predetermined interest rate. The interest rate remains constant throughout the tenor, providing predictable returns. This type of FD is ideal for conservative investors seeking a safe investment option.
Key Features:
- Fixed interest rate
- Tenors ranging from 7 days to 10 years
- Suitable for risk-averse investors
Tax-saving Fixed Deposit
Tax-saving fixed deposits offer the dual benefit of saving tax and earning interest. Investments in these FDs can receive a tax deduction of up to ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961. However, these FDs typically come with a mandatory lock-in period of 5 years.
Key Features:
- Tax deduction under Section 80C
- 5-year lock-in period
- No premature withdrawals allowed
Senior Citizens’ Fixed Deposit
Senior citizens’ fixed deposits are specifically designed for individuals aged 60 and above. These FDs offer higher interest rates compared to regular FDs, providing better returns to senior citizens who often rely on fixed income sources.
Key Features:
- Higher interest rates
- Tenor ranging from 7 days to 10 years
- Exclusively for senior citizens
Flexi Fixed Deposit
Flexi fixed deposits combine the benefits of a fixed deposit and a savings account. These FDs are linked to your savings or current account, allowing you to enjoy liquidity while earning higher interest on the surplus funds. You can withdraw funds when needed without breaking the entire FD.
Key Features:
- Linked to savings or current account
- Provides liquidity and higher returns
- Partial withdrawal facility
Cumulative Fixed Deposit
In a cumulative FD, the interest is compounded on a quarterly or annual basis and paid during the maturity period along with the principal amount. This type of FD is suitable for investors who do not need regular interest payouts and prefer to receive a lump sum at maturity.
Key Features:
- Interest compounded and paid at maturity
- Higher returns due to compounding
- Suitable for long-term investment
Non-Cumulative Fixed Deposit
Non-cumulative fixed deposits provide regular interest payouts at monthly, quarterly, half-yearly, or annual intervals. This type of FD is ideal for individuals who require a steady income stream from their investments.
Key Features:
- Regular interest payouts
- Suitable for individuals needing periodic income
- Tenor ranging from 7 days to 10 years
NRO/NRE Fixed Deposit
NRO (Non-resident Ordinary) and NRE (Non-resident External) Fixed Deposits cater to Non-resident Indians (NRIs). NRO FDs are used to manage income earned in India, while NRE FDs are for income earned outside India. NRE FDs are tax-free in India, making them an attractive option for NRIs.
Key Features:
- Tailored for NRIs
- NRE FDs are tax-free in India
- Different tenors range options available
Choosing the Right Fixed Deposit
Selecting the right type of FD depends on your financial goals, liquidity needs, and tax considerations. Here are some factors to consider:
- Financial Goals: Identify your investment objectives. For tax-saving purposes, opt for a Tax-Saving FD. For regular income, choose a non-cumulative FD.
- Interest Rates: Compare interest rates across different types of FDs and issuers on marketplaces. Click on bajajfinservmarkets.in to check detailed information on the latest interest rates and FD options.
- Liquidity Needs: Consider your need for liquidity. Flexi FDs offer partial withdrawal facilities, while cumulative FDs are better suited for long-term investments without the need for regular payouts.
- Tax Benefits: Utilise tax-saving opportunities with tax-saving FDs and understand the tax implications of NRE/NRO FDs if you are an NRI.
Fixed Deposits in India come in various forms, each catering to different financial needs and goals. Whether you are looking for tax benefits, higher interest rates, regular income, or flexible withdrawal options, there is an FD that fits your requirements. Go through marketplaces like Bajaj Markets to compare different types of FDs and make informed decisions to grow your savings securely.
