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Is it possible to split a fixed deposit into 2 or more parts?

By Finserv MARKETS - Aug 1,2019
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Is it possible to split a fixed deposit into 2 or more parts?

Why you need a fixed deposit?

Fixed deposits help you create a habit of you own dedicated savings. With so many benefits like assured returns with high safety ratings, flexibility of fixing money, risk-free investment and others, a fixed deposit is the best way to build and manage your wealth. Fixed deposit interest rates allowed by financial institutions change from time to time. Some banks offer better interest rates at a shorter period whereas others offer better interest rates in a longer span. You can also invest in fixed deposits, more precisely known as company fixed deposits, where non-banking financial institutions or companies accept deposits. Here are a few reasons which prove that fixed deposit is the best form of investment:

  • Returns are assured: Invest in fixed deposits for guaranteed returns. Unlike stock market investments, they are not subject to market risks. While investing your money you are aware of the exact amount you are about to earn at maturity. This in return helps in planning your finances properly, depending on your savings. The returns in fixed deposits vary as per the tenure of investments. Few banks offer returns from 7% to 8% depending on the tenure.
  • Risk-free investment option: Most financial instruments like mutual funds, ULIPs and gold ETFs are volatile and highly depend on the market scenario. Eventually it becomes compulsory to invest in debt instruments in order to adjust the potential market risk. However, this is not the case with fixed deposits. Fixed deposit interest rates at the end of the lock-in period do not depend on the profit of the organisation which makes fixed deposit a safer choice.Is it possible to split a fixed deposit into 2 or more parts

Source: myinvestmentideas.com (January 9. 2019 data),

Green colour indicates interest rates have been increased compared to previous article.

Red colour indicates interest rates have been reduced compared to previous article

  • Provide flexibility and easy to access credit: Fixed deposits provide flexibility of withdrawing your money before its maturity. Also, fixing the amount of money over a period of time becomes easier. A person has the option to choose from a number of tenure duration that might range from 7-10 years. The best part is one can go for fixed deposits in any bank irrespective of having an account in any of the banks.
  • Choice of deciding when to receive the interest gains: A person is left with the choice of deciding whether he/she wants cumulative or non-cumulative interests. If a person depends on the interest gain to pay off bills and other expenditures, he/she can go for monthly or quarterly payouts. Also, keeping the savings locked up till the end of the tenure is also another option in your hand.
  • Helps to avoid liability crunch: Liabilities are the obvious outcomes arising due to uncertainty. Availability of cash becomes necessary. In such a condition, one has the option of taking a loan against fixed deposits. One does not have to go through the rule of bank’s percentage offerings as well. In some cases, banks also give higher amounts but it comes with the shortfall of higher interests in those cases.

Splitting a fixed deposit

Every investment is aimed towards maximizing the amount of return from it. Fixed deposits have always been investors’ favourite choice as most investors look for decent returns combined with the security of their capital. In order to avoid TDS, one can split his/her fixed deposits, which means instead of opening a single account, he/she can open accounts in various branches of the bank in order to divide the deposit among these.

There is no restriction from RBI while opening multiple accounts. There is no limit as to how many fixed deposit accounts one can open at banks or NBFCs. Splitting fixed deposits into two or more has its advantage – in case of an emergency, one does not have to break all the fixed deposits. You can simply withdraw by breaking one or two accounts and keep the rest intact. Here are a few guidelines that will help you split up your fixed deposits and earn a decent interest income from them.

  • Spread your deposits across various financial institution: You can spread your deposits across different financial institutions instead of holding one or multiple FDs with one particular lender.
  • Invest in various schemes: Banks and other financial institutions offer different FD schemes, which vary in respect to duration and interest payment methods. What’s beneficial for you is compounding interest as it will let you earn more on the capital. If you in a 5-year tax saving scheme, you get all tax benefits under section 80C.
  • Laddering your fixed deposits across various tenures: Instead of using a lump sum money for opening a long-term FD account, you must ladder the amount across various tenures, 1 lakh a year and another 1 lakh in 2 years. Fixed deposit interest rates are affected by monetary and fiscal policies and if you lock in the FD at a low-interest rate for a long period, there is a high chance you will incur loss of opportunity given that the interest rates show a rising trend. By laddering your fixed deposit, you can eventually level out the risks associated with interest rate. On top that, short-term fixed deposits also have the capability to get reinvested at a higher interest rate on its maturity. To sum it up, splitting your FDs into two or more helps maximize the rate of interest and leverage fluctuations in ROIs.

Conclusion

Wealth must be invested wisely and the habit of saving must be inculcated in every person irrespective of age. The best way to do that is by setting a fixed deposit account via Finserv MARKETS. Fixed deposits on Finserv MARKETS offers an attractive interest rate and multiple benefits like easy online application, flexible tenure, assured returns along with high safety ratings. It also allows easy liquidation at the times of crisis.

“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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