How Are Fixed Deposit Accounts Better Than the Rest?
Fixed Deposits are a financial instrument that provides investors an option to have a policy that would yield them higher interest rates as compared to a savings account. Additionally, clients prefer this as an investment option as they do not require a creation of a separate account unlike other schemes. The entire reason why majority of individuals consider having a fixed deposit is because they are the safest form of investment. The additional befit of having a fixed deposit is that the money cannot be withdrawn from the bank before the maturity period, this stops you from using the money or rather wasting it.
A Fixed Deposit Account has interest rates that vary between 4 and 11 percent, depending the bank you opt for. On the other hand, the tenure for this would vary from a mere 7 day period and can be extended to as much as 10 years. An addition to the interest amount gained, you also get several income tax and wealth tax benefits, which result in you being able to save a lot of your hard-earned money.
In order to compensate for the low liquidity, fixed deposits offer you high interest rates compared to any other kind of account. Generally, in India the interest amount calculated on fixed deposits is paid at a period of three months, which is sent to the customers in the form of cheques. Although banks can easily refuse to repay fixed deposits before the date of expiry they generally do not do so. You can easily withdraw your amount as and when you desire to, this is known as premature withdrawal. However, you should remember that if you do so, you would not receive the entire interest amount. Additionally, several banks also charge you a penalty for premature withdrawal. So, make sure you confirm with your bank the charges before creating a fixed deposit with them, or else you would be losing money instead of gaining.