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Are all fixed deposits long-term in nature?

By Finserv MARKETS - Oct 15,2019
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Are all fixed deposits long-term in nature?

Fixed Deposits (FDs) are safe and reliable investment instruments which lock-in your money for a specified duration, and provide interest payouts on a predetermined basis. FDs are among the most popular investment vehicles in India, as you earn a high-interest payout without any risk to the principal amount. As compared to other investment options, like mutual funds, your investment amount is not affected by market volatility. FDs are provided by financial institutions, including banks and Non-Banking Finance Companies (NBFCs). Along with fixed returns, FDs provide several benefits like the option of selecting the best flexible tenure according to your unique financial requirements.

With the advent of technology, fixed deposits have now become a highly flexible investment product. You can now invest in a hassle-free online fixed deposit. For instance, on Finserv MARKETS, you can easily open a fixed deposit account online with minimal documentation. Without visiting any branch, you can keep track of the fixed deposit account online from anywhere, even if you change cities.

Are all fixed deposits long-term?

Usually, financial institutions provide FDs which can range between one year and five years. Not all FDs are long-term. If you are looking for a short-term FD, then you can invest in an FD which has a tenure ranging from 12 to 24 months. On Finserv MARKETS, you can choose from fixed deposit tenures ranging from 12 months to 60 months. This means that if you are looking for a short-term investment, then you can invest in tenures ranging from 12 to 24 months. For long-term investment you can select flexible tenures between 36 to 60 months.

What if you want to make a premature withdrawal of your FD?

Usually, financial institutions charge a penalty for premature withdrawals. But, on Finserv MARKETS, there is no penalty charged in the case of a premature withdrawal. Here, your fixed deposit is locked-in for a fixed tenure of three months. If you opt for premature withdrawal before six months, then you will not benefit from any interest payout. You must understand that although no penalty is charged, you stand to lose in terms of earned interest in the case of premature withdrawal. In the case of a financial crunch or emergency, you can always take a loan against your FD. You can avail the facility of loan against fixed deposit up to 75% of the invested amount in a cumulative FD, and up to 60% of the principal amount in the case of a non-cumulative FD. You also have the option of availing an online loan of up to Rs 4 lakh on Finserv MARKETS.

Here, you must understand the difference between a cumulative and non-cumulative fixed deposit account. While you can avail interest payout on a cumulative FD only on maturity, the non-cumulative FD allows you to avail the interest payouts on a regular basis. These can be monthly, quarterly, half-yearly or on an annual basis. Cumulative fixed deposits have a higher interest payout as compared to non-cumulative FDs. These FDs are best suited for people like pensioners who need a regular income from interest payouts.

Rate of interest on fixed deposits

Usually, companies offer an interest rate ranging from 5% to up to 8.5% on fixed deposits. You should always compare the interest rates being offered by different companies before investing in an FD. On Finserv MARKETS, you can invest as a new customer in the Bajaj Finance FD, and avail an interest rate of 8.60% for cumulative scheme tenors ranging from 36 to 60 months. Senior citizens enjoy special rates of 0.35% over the existing rate while existing customers get 0.25% over the existing rate. You can also avail an additional rate of 0.10% per annum on renewing your fixed deposit.

Benefits of fixed deposits: You must remember that a fixed deposit comes with several benefits. Some of the benefits are:

  • Assured returns

The interest payout is guaranteed as per the terms of your FD policy. This is the foremost benefit of a fixed deposit.

  • Minimum investment

You do not require to accumulate a large corpus to invest in FDs. For instance, you can start investing with a minimum amount of Rs 25,000 on Finserv MARKETS.

  • Multiple accounts

Another key benefit of fixed deposit plans is that you can open multiple FD accounts of various tenures to suit your investment horizons–both long-term and short-term.

  • Helps save tax

You can invest in a tax-saving FD, which allows you to claim a tax deduction for income up to Rs 1.5 lakh in a given assessment period, under Section 80 C of the Income Tax Act. This FD has a lock-in period of three years.

Conclusion

Thus, you can invest in both short-term and long-term fixed deposits according to your investment horizon. You can consider investing in fixed deposits on Finserv MARKETS in flexible investment tenures ranging from 12 months to 60 months.

Finserv MARKETS , from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no-cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522