Why Should Students Consider Booking an FD?

Investing in Fixed Deposits (FDs) is advantageous for students due to their safety and stability, providing capital protection with predictable returns. FDs encourage disciplined saving habits through lock-in periods, making them suitable for short-term goals and emergency fund creation.

 

The ease of operation, minimal maintenance, and potential tax benefits add to the appeal for students. Additionally, FDs contribute to financial learning by introducing concepts such as interest rates and goal-oriented planning.

 

Building a positive relationship with banks through FDs can also enhance creditworthiness for future financial transactions.

 

Refer to the table below to help you understand the potential returns you could earn on a monthly compounded ₹25,000 FD at an interest rate of 7.50% p.a.

Tenor

Annual Interest on ₹25,000

Maturity Amount for ₹25,000

12 months

₹1,875

₹26,875

24 months

₹3,891

₹28,891

36 months

₹6,057

₹31,057

48 months

₹8,387

₹33,387

60 months

₹10,891

₹35,891

Benefits of Fixed Deposits for Students

Booking an FD offers several benefits for students as a financial tool for savings and investment. Here are some key advantages - 

  • Stable Returns

FDs provide a fixed and predictable interest rate over a specified period. This stability can be reassuring for students who want to ensure a steady return on their savings.

  • Capital Preservation

FDs are considered a low-risk investment, offering capital preservation. Students can be confident that the amount they invest will not be subject to market volatility.

  • Disciplined Saving

FDs often have a lock-in period or penalties for early withdrawal. This encourages disciplined saving habits among students, helping them set aside money for future needs.

  • Emergency Fund

FDs can serve as a reliable emergency fund. In case of unexpected expenses or financial emergencies, students can break the FD (with applicable penalties) to access the funds.

  • Ease of Operation

Opening and managing an FD is a straightforward process. Issuers offer online platforms, making it convenient for students to monitor their investments.

  • Educational Expenses

Students can use the returns from FDs to cover educational expenses, such as tuition fees, books, or other academic-related costs.

  • Financial Learning

Investing in an FD provides students with an opportunity to learn about financial instruments, interest rates, and the importance of long-term financial planning.

  • Tax Benefits

Some FDs come with tax benefits, particularly those with a lock-in period of five years or more. This can be advantageous for students looking to save on taxes.

  • Short-Term Goals

FDs are suitable for short-term financial goals, such as saving for a specific purchase or funding a short-term project. Students can align their investment horizon with the maturity period of the FD.

  • Building Creditworthiness

Students who maintain FDs with a bank may enhance their relationship with the bank, which can be beneficial for future financial transactions and building creditworthiness.

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Minimum Amount Required to Invest in FD for Students

The minimum amount required to invest in a FD varies among banks and financial institutions. Generally, issuers set their own minimum deposit amounts, and these can differ based on factors such as the type of FD, tenure, and the specific terms of the financial institution.

 

In many cases, banks have relatively low minimum deposit requirements as low as ₹100, making FDs accessible to a broad range of investors.

 

It's crucial to check with the specific bank or financial institution where you plan to open the FD to determine their minimum deposit requirements. 

 

While the returns on an FD are assured, they can differ based on the interest rates and the tenor of the deposit.

 

Since fixed deposits for students can determine the financial capital they have later on in life, it is important to take these decisions after significant deliberation. Make sure to check these details with the bank or NBFC before you start a FD with the concerned institution.

Compare Fixed Deposit Interest Rates

Partner
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Maximum Interest Rate
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Maximum Tenor
sort list
Minimum Deposit Amount
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Bajaj Finance

8.60% p.a.

60 Months

₹15,000

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PNB Housing Finance

8.15% p.a.

120 Months

₹10,000

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Mahindra Finance Ltd

8.30% p.a.

60 Months

₹5,000

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AU Small Finance Bank

8.50% p.a.

120 Months

₹1,000

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YES Bank

8.00% p.a.

120 Months

₹10,000

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Ujjivan Small Finance Bank

8.75% p.a.

120 Months

₹1,000

View More

FAQs

Can a student apply for Fixed Deposit?

Yes, students can apply for Fixed Deposits at many banks with a minimum age requirement, often requiring a parent or guardian as a joint account holder. Documentation, including proof of identity and address, is necessary. Students can use their savings from various sources to meet the minimum deposit amount. FDs provide a safe and disciplined way for students to start investing and save for their future goals.

Are Fixed Deposits a secure investment choice for students?

Yes, FDs are a secure investment choice for students. Offering capital protection and a fixed interest rate, it minimises risk and encourages disciplined saving. With predictable returns, ease of operation, and potential tax benefits, FDs provide a stable financial instrument for students to build savings and achieve short-term goals.

What are the minimum and maximum FD tenors available for students?

The minimum and maximum FD tenors available for students vary by bank. Generally, FDs offer tenors ranging from a few days to several years. Short-term tenors may start from seven days, while long-term options can extend up to ten years or more.

What are the documents required for Students to open a Fixed Deposit Account?

Students typically need identification documents such as a valid government-issued ID, proof of address, and, if applicable, the guardian's documents. In cases where a student is a minor, a parent or guardian may need to co-sign the FD and provide their details. Documentation requirements can vary, so it's advisable to check with the issuer at the time of applying.

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