Corporate FD vs Bank FD: Overview

To facilitate a comparison between company FD vs bank FD, here is a table outlining the differences between the two:

Particulars

Corporate FD

Bank FD

Interest rates

Comparatively higher

Comparatively lower

Tenor

Generally ranges from 12 months and ten years

Range from seven days to ten years

Risk

Comparatively higher risk for the investor

Low-risk investments and come with security of up to ₹5 Lakhs by DICGC

Withdrawal charges

  • No charges are levied if you withdraw funds from your corporate FD after 3 to 6 months from the date of investment

  • 2-3% charges may apply if you withdraw after 6 months

Banks charge around 0.5%-1% penalty on premature withdrawal of funds.

Tax benefits

Corporate FDs do not have any tax benefits

Tax-saving FDs allow investors to claim deductions of up to ₹1.50 Lakhs under Section 80C of the IT Act

Similarities between Corporate FD and Bank Fixed Deposits

While corporate FDs differ from bank FDs in many ways, there are also some similarities. These include the following:

1. Guaranteed Returns

While corporate FDs can provide higher returns compared to bank FDs, both of them offer guaranteed returns. As both of them have a fixed interest rate, you get to know the amount you will get at the time of maturity.

2. Higher Rates for Senior Citizens

Like bank fixed deposits, corporate FDs also offer marginally higher interest rates to senior citizens. This makes both types of fixed deposits an ideal investment tool for retired individuals.

3. Flexible Tenor  

As mentioned above, the tenor of corporate FDs and bank FDs can extend up to 5 years and 10 years. Hence, both these types of FDs offer you the flexibility to choose a tenor that best suits your financial requirements.

Things To Consider When Choosing Between a Corporate FD Vs Bank FD

When comparing a corporate FD vs a bank FD, consider the following points to make a well-informed decision and prioritise your financial well-being.

1. Define the Purpose of Investment

For short-term goals, bank FDs may be an ideal option. Their lock-in periods are shorter and interest rates are competitive, leading to better returns.

2. Evaluate the Market 

Interest rates for bank FDs have declined over the past few years. Lower interest rates may result in returns that are inadequate to combat inflation. So, it is important to do the due diligence before you decide to invest. 

3. Review All Your Options 

Along with interest rates, tenor, and lock-in periods, you must look at all the other benefits, penalties, and attributes of the options available. This helps you compare the returns of corporate FD vs bank FD instruments before zeroing in on an investment avenue.

Final Thoughts

The bank FD vs corporate FD assessment is a good way to identify value, but remember that both have pros and cons. Regardless of the issuer, fixed deposits are a trusted avenue of investment. 

 

You can browse for the right FD on Bajaj Markets. With a quick and easy online process, you can not only find the best options but also invest just as easily. 

Disclaimer :

The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort.

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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FAQs on Corporate FD vs Bank FD

Are corporate fixed deposits safe?

If you compare bank FD and corporate FD, you will find that the latter has a higher risk factor as they are unsecured.

Is a fixed deposit the safest investment?

FDs are considered one of the safest forms of investment as they offer assured returns.

Do bank FDs and corporate FDs have the same interest rate?

No, the interest rate offered on corporate FDs is generally higher than bank FDs. However, comparing corporate FD vs bank FD interest rates is advisable before you decide on any of them.

Do all corporate companies provide fixed deposits?

No, not all companies offer fixed deposits.

Is TDS deducted on the interest from a corporate FD?

The issuer deducts TDS only if the interest earnings exceed the threshold mentioned in the Income Tax Act.

Are NRIs eligible for corporate fixed deposits?

Yes, depending on the issuer, NRIs can invest in corporate FDs.

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