3 Main Types of deposit Accounts, which one should you choose?

Fixed deposits are one of the most straightforward and effective investment instruments in the country as they ensure guaranteed returns and save you the hassle of worrying about market fluctuations. Once invested, your finances grow steadily through the tenor thanks to the constant fixed deposit interest rates.

Another reason why FDs are so compelling is that they keep your savings in an environment that minimises risk or negates it completely. However, to make best use of them, you should keep in mind that fixed deposits come in different variants: regular FDs, tax-saver FDs, and senior citizen FDs. When opening an FD account, you will have to decide which one of these deposits is best for you. To help you make this decision prudently, let’s take a deeper look at these three types of deposits.

Regular FD

Regular FDs can be opened at banks and post offices or with NBFCs and companies and offer you lucrative interest rates and flexible tenors. The interest rates on FD range from 6% to 9% and tenors range from 7 days to 10 years. You can choose to receive frequent payouts or receive the total sum upon maturity. By choosing the latter, you can gain the highest returns due to the power of compounding but can access your interest only at the end of the tenor. The former, on the other hand, offers you income from regular interest payouts, but at a lower interest rate.

Use this form of FD if you are looking for an investment instrument that is safe and yet generates high returns. To illustrate, when you invest in a Bajaj Finance Fixed Deposit, you get an FD interest rate of 8.75% when starting an FD for 36 months with returns at maturity. Bajaj Finance also offers a special tenor scheme wherein you get a 0.05% higher FD interest rate when setting your tenor to 15 months instead of 12. This FD also helps you create healthy investment habits by offering a 0.25% higher FD interest rate for FD renewals. This way you can be earning at a 9% interest rate and see your wealth grow.

You can also prematurely withdraw this FD by paying a small penalty and even access additional funds in times of need via a loan against FD offered by most issuers.

Tax-saver FD

Offered by banks and post offices, tax-saver FDs qualify for a deduction of up to Rs.1.5 lakhs under Section 80C of the Income Tax Act on your investment in a given financial year. These FDs have a 5-year lock-in period. Premature withdrawals are not allowed, and neither can this FD be used as collateral to get a loan amount.

Pick this type of FD if you are looking for a tax-saving instrument and do not mind a lack of liquidity from this source of investment for 5 years. As per Section 80C, up to Rs.1.5 lakhs can be deducted from your gross income to give you your taxable income. Should your taxable income be equal or less than Rs.5 lakhs you can be eligible for a full tax rebate according to the Interim Budget 2019. Tax-saver FDs are applicable to senior citizens as well.

Senior citizen FD

Citizens above the age of 60 years can apply for a Senior Citizen Fixed Deposit Scheme. This type of FD comes with increased interest rates. For instance, Bajaj Finance offers senior citizens a 0.35% higher FD interest rate than what is offered to regular customers. With a Bajaj Finance FD, retirees can get an interest rate of up to 9.10% when they opt for an FD that offers earnings at maturity started for at least 36 months. If you are eligible for this type of FD, you should definitely be making use of its additional benefits.

Now that you know about these 3 kinds of FDs, take a moment to look at the benefits that come your way when you opt for a Bajaj Finance Fixed Deposit. Here, you get interest rates as high as 9.10%, flexible tenors of 12 to 60 months and can choose your payout frequency according to your needs.

When planning your finances, you need leave nothing to prediction as you can get accurate ROI figures by using the Bajaj Finance Fixed deposit calculator. In a cash crunch, you can use this FD as collateral to get a quick loan too. Getting started is easy as you need just Rs.25,000 to open an account. Further, you can monitor your returns in real time by managing your account online. This is a safe investment avenue as it carries an ICRA rating of MAAA and a CRISIL rating of FAAA, which is the highest safety rating offered by both agencies. So, side-step lengthy queues and start investing in minutes by filling this application form online!

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