Earn interest up to 7.75% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)

 A fixed deposit guarantees assured returns as well as great safety being unrelated to any market risks. Being a simple product to understand, it is used by most people to grow their money. But did you know that the benefits of FD are not just limited to the financial world? A fixed deposit investment can affect your life way beyond the finances. Let’s understand the non-financial benefits of FD.

Non-Financial Benefits of Investing in an FD

Apart from the financial benefits of FD, there are various non-financial benefits as well. These benefits can help lead a better life. Here is a look at them:

Improves Risk Appetite

A fixed deposit is a secure and safest investment option. As the invested money is safe, you can invest in other high-risk investments that are market-linked, like ELSS, mutual funds, SIPs, etc. You can then have a diverse investment portfolio, thus, improving risk appetite by keeping a chunk of money safe.

Emergency Fund

A fixed deposit offers great liquidity as almost all financial institutions offer the facility to prematurely withdraw the FD amount. Some of the banks or NBFCs also offer the facility to take a loan against a fixed deposit. This way, you always have a backup for any emergency fund required.

Can be Used in Lieu of Collateral

If you wish to take a secured loan but do not have the collateral to avail the same, your fixed deposit certificate can act as your collateral. By doing so, you can still earn interest income while having access to the loan amount as well.

Instils a Saving Habit

A fixed deposit helps you in doing proper financial planning. When you start an FD account, you tend to save a certain amount of money for a specific period of time. This, in turn, inculcates a habit of saving money in most first-time lenders. This habit is crucial in the long term and it is one of the important benefits of FD.

Financial Benefits of Fixed Deposit

Now that you know the non-financial benefits of fixed deposit, let’s also explore the important financial benefits of FD:

Assured Returns and Utmost Safety

A fixed deposit is not market-linked, and hence, it is unaffected by any market fluctuations. The FD interest rates stay the same throughout the tenor and you know what to expect from the investment. You can make use of an online FD calculator to estimate the same.

Backing of Deposit Insurance

Bank fixed deposits in India are covered with an insurance of ₹5 lakh. It is provided by Deposit Insurance and Credit Guarantee Corporation (DICGC), a fully owned subsidiary of the Reserve Bank of India (RBI). In case a bank goes bankrupt and fails to pay back your savings or deposit amount, you will get the compensation of ₹5 lakh. Irrespective of your amount of investment, even if it is less than ₹5 lakh, you will still get the full amount of ₹5 lakh.

Tax Benefits

Almost every bank offers a tax saving fixed deposit that helps in reducing your tax liability. A tax deduction of up to ₹1.5 lakh can be claimed under Section 80C of the IT Act, 1961. However, you cannot opt for premature withdrawal of FD here as your money is locked in for five years.

Senior Citizen Benefits

The FD interest rates offered to senior citizens are usually higher than non-senior citizens. Most of the banks and NBFCs follow this and offer high-interest rates to senior citizens. The FD interest rates for senior citizens are around 0.25% higher than non-senior citizens.

Loan Against FD

Instead of going for other loans with a higher interest rate, you can go for a loan against a fixed deposit. This way you can tend to any emergency financial expenses without losing out on interest income.

Simple Investment Tool

Unlike other investment tools, a fixed deposit is a simple investment tool. You just have to deposit your money for the set tenor and predetermined rate of interest and then watch it grow. You do not need to constantly monitor your FD unlike equity funds and as mentioned above, no market fluctuations affect your investment.

Bajaj Finance FD Interest Rates

The interest rates offered by Bajaj Finance FD are higher than most of the banks or NBFCs. Therefore, if you invest in a Bajaj Finance FD, you can grow your money faster. Let’s have a look at the FD interest rates in Bajaj Finance FD.

Annual Interest Rate Valid for Deposits From ₹25,000 up to ₹5 Crore (w.e.f. May 12, 2021)

Tenor in Months

12-23

24-35

36-60

Cumulative

5.65%

6.40%

6.80%

Monthly

5.51%

6.22%

6.60%

Quarterly

5.53%

6.25%

6.63%

Half-Yearly

5.57%

6.30%

6.69%

Annual

5.65%

6.40%

6.80%

FAQs

  • ✔️Is investing in FD a good idea?

     Investing in a fixed deposit is ideal for those who want a low-risk investment with assured returns. If you are looking for such a safe and steady source of income, FD is a good idea for you.

  • ✔️What is an FD investment?

     A fixed deposit is an investment tool where you deposit a lump sum amount for a specific tenor and at the set interest rate. You will then earn an interest income that will be paid out at maturity.

  • ✔️What happens to FD after maturity?

     After the maturity of an FD, the bank will charge lower interest rates applicable from savings rate or contracted interest.

  • ✔️Is FD taxable on maturity?

     Interest income earned on a fixed deposit is fully taxable. However, TDS is deducted at the time of credit of interest and not on the maturity of FD.

  • ✔️Does FD have tax benefits?

     Yes, a tax deduction of up to ₹1.5 lakh in a financial year can be claimed under Section 80C of the Income Tax Act, 1961.