Both fixed deposits and savings account are safe and reliable instruments to park your surplus funds. But fixed deposits offer a host of advantages as compared to savings accounts. These include a higher rate of interest, greater flexibility in investment and managing your funds along with tax benefits and other convenience features. Read on to know about FDs made available on Finserv MARKETS.
A savings account is a deposit account opened at a bank or a financial institution, which provides a moderate interest rate. Usually, financial institutions ask customers to maintain a requisite balance in their account, failing which certain charges are levied. But, one can also opt for a zero balance, Basic Savings Bank Deposit (BSBD) account. Cheque and passbook facility along with ATM/Debit card and internet banking services are also provided in a savings account. Through internet banking, you can avail the free facility for credit of money by modes of electronic payment like NEFT and RTGS. Most banks cap the withdrawal of cash through ATMs/Debit card within 24 hours. Interest rates on a savings deposit can range from 2.5% to 4% on an annual basis. Savings accounts provide a good option to people for depositing their funds on a short-term basis. You can easily liquidate your savings deposit for short-term requirements or emergencies without any tax implications.
Fixed deposits are investment schemes where your money is locked into a specified tenure ranging from one year to five years with predetermined annual interest rates which can vary between 5% and 8.95%. For instance, On Finserv MARKETS, you can invest in a fixed deposit scheme having tenors ranging from 12 months to 60 months. Here, the rate of interest is 8.60% for a new customer, and up to 8.95% for senior citizens. To put it simply, fixed deposits are the schemes with dual benefits of being safe modes of investment which provides additional income to depositors through high fixed deposit interest rates.
Here are the reasons why fixed deposits are always a better investment option.
Higher rate of interest: While savings accounts can provide you with meagre annual interest rates ranging from 2.5% to 4% depending upon the amount and period of deposit, fixed deposits provide a higher interest rate of up to 8.70%. On Finserv MARKETS, you can invest in the Bajaj Finance Fixed Deposit, which provides an interest rate of 8.60%, which can go up to 8.70% with a reliable interest flow that helps you plan and manage your expenses easily. Senior citizens can avail an interest rate, as high as 0.35%, over and above the regular interest rate.
Flexibility of tenors: Unlike savings accounts, where there is no fixed tenor, you can invest in a fixed deposit in flexible tenors ranging from 12 months to 60 months. You also have the option of investing in multiple fixed deposits with different tenors.
Interest payout can be availed as per your choice: In a fixed deposit, you have the option of receiving interest payout according to your choice. If you invest in non-cumulative fixed deposits, the interest rate can be received on a monthly, quarterly, half-yearly or annual basis. If you wish to invest in cumulative fixed deposits, you can avail a higher interest payout on maturity. Periodic interest payouts are especially beneficial for senior citizens who require regular income for their post-retirement years.
Tax benefits: If you chose to invest in a tax-free fixed deposit, which has a minimum lock-in period of five years, then you can also avail tax benefits. Under Section 80 C of the Income Tax Act, you can claim a tax benefit of up to Rs 1.5 lakh on interest pay out.
Option of availing a loan against fixed deposit: Unlike savings accounts, you can avail easy and hassle-free loans on your fixed deposit. Such a loan is easy to secure as the principal amount of the deposit acts as collateral. The sanctioned loan amount is generally a certain percentage of the principal deposit amount. For instance, on Finserv MARKETS you can avail of a loan up to 60% of the amount invested in non-cumulative fixed deposits and 75% of the amount invested in cumulative deposits. Loans on fixed deposits enable you to meet any emergency or long-term expenditure.
Encourages saving: You can easily withdraw money from a savings account. But in the case of a fixed deposit your money in locked-in for a specified period. This inculcates a sense of financial discipline, and you save more. Fixed deposits also provide added benefits like compoundable interest rates, which further increases your earnings. Through financial discipline, your wealth appreciates over a period of time.
Option of calculating interest beforehand: In the case of a fixed deposit, you can calculate the interest payout before making an investment through an online fixed deposit calculator. You just have to provide the amount to be deposited, the deposit term and the interest rate being offered in this simple and convenient online tool. On Finserv MARKETS, you can use the Bajaj Finance Fixed Deposit online calculator to evaluate your returns before investing.
Fixed deposits comes with a slew of convenience features: A fixed deposit account is easy to open and requires minimal documentation. You are usually required to submit KYC documents along with recent photographs and a copy of the bank account together with a cancelled cheque. Many added service benefits are often provided with fixed deposits. For example, on Finserv MARKETS, you are provided with:
Easily accessible touch points.
Simple and transparent policies.
Detailed SMS and email communication to customers while booking a fixed deposit, from request to maturity.
Scanned copy of all the documents submitted by you, available online for easy access.
Before zeroing in a fixed deposit, you must ensure that the financial institution has the requisite credit worthiness. On Finserv MARKETS, you can select fixed deposits, which have excellent ratings from leading analytical companies like CRISIL and ICRA. Bajaj Finance Fixed Deposits has the highest stability rating of ‘FAAA’ by CRISIL and ‘MAAA’ by ICRA. In 2019, Bajaj Finance Ltd was assigned a long-term rating of ‘BBB-/Stable’ and a short-term rating of ‘A-3’ by S&P Global Ratings. Here, you can receive attractive and assured rates of interest along with considerable flexibility in choosing the right fixed deposit for your unique financial requirements.