Features and Benefits of Fixed Deposit Account

Do you want to grow your wealth without having to lose sleep over market volatility? That’s where India's favourite investment option comes in, fixed deposits. 

Start by keeping your money with a trusted bank or an NBFC for a particular period of time. Earn a fixed interest rate, even up to 8.40% and that’s it! Your money multiplies securely. 

However, what is it that makes FDs so special? Let us dive into the features and benefits of a fixed deposit account, which make it the top pick among risk-averse investors.

Quick Overview 

• A safe investment option where you can invest a lump sum for a specific time period.
• You will receive an interest amount determined at the time of opening the FD account, either monthly, quarterly, half-yearly, annually or upon maturity.
• The interest rate offered is better than what a savings account offers. 
• Tax-saving FDs help claim tax deduction under Section 80C. 

What is a Fixed Deposit Account?

Fixed Deposit (FD) is an investment in which you can invest a lump sum for a set amount of time with a financial institution or bank. The deposited amount will yield interest at a fixed rate, which is determined at the time of opening an account. You will receive the interest either every month, quarterly, half-yearly, annually or upon maturity.

Fixed Deposit Account Features

Fixed Deposits offer several notable benefits, alongside being flexible and safe for the investors’ hard-earned savings. Take a look at the features of a fixed deposit account below: 

1. Returns: The returns are compounded annually, quarterly or monthly. 
2. High Interest Rates: Fixed deposits offer higher interest rates compared to regular savings accounts. Especially, if you choose the Stable Money to start your FD, you can get up to 8.40% interest rate as returns!
3. Tenure: the tenures of fixed deposits range between 7 days and 10 years. You can choose any tenure based on your financial needs and get the applicable interest rate.
4. Premature Withdrawals: Partial or premature withdrawals are permissible with a levy of penalties. 
5. Returns to Senior Citizens: Senior citizens usually receive 0.5% more returns than regular investors. 
6. Deduction of Tax: Taxpayers will be able to invest in tax-saver fixed deposits and thus, save taxes under the Section 80C.
7. Reinvestment: Upon the maturity of an existing fixed deposit, it will be automatically reinvested if you opt for a fixed deposit renewal. 
8. Flexibility Factor: Post-maturity, investors will be able to withdraw the funds/choose to reinvest for another period of time.

Fixed Deposit Account Benefits

Fixed Deposits come with guaranteed returns, a predictable earning structure and are associated with low risk. Their flexibility with picking a tenure choice makes them an attractive option for investors who are looking for stability, safety and steady financial growth prospects.

Here are a few advantages of fixed deposits discussed in detail: 

1. Guaranteed Returns: The primary advantage of fixed deposit is that it offers fixed returns. This implies the assurance of returns irrespective of any market fluctuation. You will receive returns at the predetermined interest rate as per your chosen tenure. 

2. Capital Security: Fixed deposits guarantee capital security. Your investment is secured with a bank, and you will receive the expected interest on time. Upon the maturity of the FD, the entire invested amount is given back to you, and there's next to no chance of losing money.

3. Loan Against FD: With fixed deposits, you can avail loan or overdraft against the amount that you have deposited. It offers you the benefit of instant liquidity. This way, you can continue earning interest while also catering to your emergency needs. In addition, it is also cost-effective as the interest rates on loans against FD are lower than personal loans. 

4. Customisable: All fixed deposits are customisable. You can start your fixed deposit with only ₹1,000, depending on the bank. There is no set maximum amount that you can deposit in a fixed deposit. You are eligible to choose tenure based on your needs and financial goals – short-term, mid or long-term. Therefore, it is easy for anyone to open a fixed deposit account. 

5. Collateral Facility: If you are considering a loan but have no collateral to pledge, FD investment allows you the ability to receive 90% of the principal in the form of an overdraft. Additionally, you can receive 85% of the fixed deposit principal amount as a loan. The loan or overdraft amount will be based on the terms and conditions of your bank and the deposit amount.

6. Liquidity: In times of emergency or financial crisis, you can withdraw the principal amount along with any accrued interest from your FD account. The withdrawal process is simple, ensuring cash accessibility whenever you need it. Moreover, some banks even allow partial withdrawals. 

7. Tax-Saving: You are eligible to claim tax deductions up to ₹1.5 lakh u/s 80C of the Income Tax Act. If you make an investment in a tax-saving FD, you will be eligible for tax deductions under this section. As a result, your tax liability will be reduced if you invest in a tax-saving FD. 

8. Suitable for Beginners: Once you make an investment in a fixed deposit account, you do not need to track the market to check its performance. The straightforward and simple process of this investment makes FDs ideal for both experienced and first-time investors. 

9. Insured Savings: A subsidiary of the Reserve Bank of India (RBI), The DICGC (Deposit Insurance and Credit Guarantee Corporation) insures your fixed deposit to the amount of ₹500,000. This implies that your FD and returns will remain unaffected even during your bank's financial crisis. 

Steps to Open a Fixed Deposit Account

Now that we are aware of the features and benefits of fixed deposits follow the steps below to open a fixed deposit account: 

Open a Fixed Deposit Account Online: 

Step 1: Sign in to your bank account online. 

Step 2: Tap on the “Transact” option and select “Open Fixed Deposits.” 

Step 3: Choose the nearest branch, enter the FD amount and tenure, select a nominee, tap on "Continue", and finally select "Confirm". 

After this, you can download the receipt of your fixed deposit. 

Alternatively, you can also book a FD with prominent banks and NBFCs via the Stable Money app. 

Open a Fixed Deposit Account Offline: 

Step 1: Go to the nearest branch of your preferred financial institution/bank.

Step 2: Request the bank executives for a fixed deposit application form. 

Step 3: Duly fill out the form with the necessary information.

Step 4: Provide the requested documents, including PAN card, Aadhaar card, etc., alongside the filled-out application form.

Step 5: Submit everything at the counter.

Step 6: Provide cash/a cheque for the amount of money you wish to invest.

Your application will then be processed. The FD account shall be opened up according to the specified timelines (established by the respective financial institution/bank).

If you want to invest in high-interest FDs and witness your hard-earned money grow even more, consider checking out the Stable Money app. Start your FD account today and set up the foundation for a stable financial future tomorrow!