How Many FDs Can You Have?

The value or purchasing power of money drops every year due to inflation, which is why people invest in various assets to increase their wealth. Recently, the MPC meeting of RBI (July 2021) concluded that the CPI inflation for the ongoing financial year 2021-22 is currently at 5.1%. Hence, a safe investment plan becomes prudent and requires a lot of caution and understanding. Investing in traditional mediums like Fixed Deposits has been one of the many ways to help tackle this issue.

When investing, most people often invest a lump sum amount in a single Fixed Deposit account. On the contrary, some consider dividing the amount into smaller investments, which increases liquidity and diversifies your investment profile. While investing in multiple FDs, many people keep wondering about “How many Fixed Deposit accounts can I have? Let us find out.

The simple answer to this question is ‘Yes’. You can open as many Fixed Deposit accounts as you want with a single bank or multiple banks, as per your financial requirements. Not all investors want to invest in assets that are risky in nature, like mutual funds, cryptocurrencies, stocks, and more. Fixed Deposits, on the other hand, help a user to make safe investments that provide assured, risk-free returns

You can also have two or more FDs in the same bank as there is no limit to the number of fixed deposit accounts you can have. However, if you are planning on opening an FD account with different banks, the minimum deposit amount varies from one bank to the other. It can range anywhere from ₹1,000 to ₹15,000 depending on the issuer you choose. One of the major perks of investing in multiple fixed deposits is that it diversifies your FD investments, meaning you can easily remove money from a single Fixed Deposit account and all your other accounts will continue to earn interest for you.

Having multiple Fixed Deposit accounts may also pose some challenges that an investor must be prepared for:

• Managing multiple accounts at once

• Keeping tabs on the maturity dates of different accounts

• Excessive follow-ups about interest credit, TDS deduction, and renewal

• All FD accounts will be linked to the same customer ID

• Interest rates vary depending on the amount and time period

In a Fixed Deposit account, you need to invest a lump sum amount right at the beginning for a fixed tenor. As FDs are one-time investment schemes, monthly deposits are not an option. For monthly deposits, many investors look for a Systematic Deposit Plan or Recurring Deposit schemes. However, you can invest money into multiple Fixed Deposits every month as there is no limit of how many FDs one can create.

As per the Income Tax Act, 1961, interest earned from fixed deposits is fully taxable. However, for senior citizens, interest income up to ₹50,000 does not attract TDS (tax deducted at source). The same is capped at ₹40,000 for non-senior citizens. However, investors can opt for a tax-saving fixed deposit (FD) account. Under Section 80C of the Income Tax Act, such FDs will help you to claim a maximum deduction of ₹1.5 lakh per financial year. The minimum tenor for a tax-saving fixed deposit (FD) account is 5 years. Thus, you can invest in multiple tax-saving FD accounts each with a 5-year-long tenor. However, remember that the maximum deduction is capped at ₹1.5 lakh.

This is quite a common question asked by several investors. As per a famous investment quote, you must "never put all your eggs in a single basket". In simple terms, having multiple Fixed Deposits spread across different banks will help you achieve the right balance between risk and returns. Also, multiple small fixed deposits will ensure that you do not cross the TDS threshold applicable on interest income from FD.

You can opt for a Bajaj Finance Fixed Deposit as it enables you to earn greater returns with a higher interest rate. You can also leverage the benefits of flexible tenor and easy online application process to start investing with just ₹15,000. Bajaj Markets offers various Bajaj Finance Fixed Deposit schemes that will fit perfectly with your investment plans. Apply for a Bajaj Finance FD on Bajaj Markets today!