Earn interest up to 7.95% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)

Short Term Fixed Deposit

A short term fixed deposit is an investment option provided by banks or non-banking financial companies that lets investors deposit a certain amount of money for a shorter tenor and earn interest income over it. Usually, the tenor of an FD ranges from 7 days to 10 years, but a normal short term FD tenor ranges from 7 days to a maximum of 12 months. The short term FD rates of interest differ from bank to bank. Fixed deposit is preferred by a lot of people as it earns you interest higher than a normal savings account. Here is a look at some of the short term FD rates offered by banks and NBFCs.

Short Term FD Rates

Bank Regular FD Rate (per annum) Senior Citizen FD Rate (per annum)
Bajaj Finance FD 5.75% to 7.08% 5.84% to 7.60%
Axis Bank 3.50% to 6.50% 5.50% to 6.90%
ICICI 4.00% to 6.50% 4.50% to 7.00%
SBI 5.75% to 6.40% 6.25% to 6.90%
Citibank 3.00% to 5.00% 3.50% to 5.50%
  • A short term FD lets you invest your money in flexible tenors of 7 days to 12 months

  • You can deposit in a short term FD only one time

  • When a short term fixed deposit matures, you can choose to renew the investment

  • A short term FD is liable to tax deductions as per the Income Tax Act, 1961

  • The interest rates on a fixed deposit account are higher as compared to a normal savings account

  • You can also withdraw your money from a short term FD before its maturity. However, a penalty might be levied by the bank or NBFC. There are some banks that do not levy a penalty on withdrawing money prematurely from an FD

  • The minimum amount required to invest in a short term FD varies from bank to bank. It is usually around ₹10,000. The minimum amount of investment is lower for minors

Advantages of Short Term Fixed Deposit

  • With shorter tenors, it becomes an ideal option for transitory savings

  • When you open a short term fixed deposit account, there is a provision for nomination

  • If you wish to prematurely withdraw your money from the FD, you will be charged an interest rate of 1% less than the applicable rate

  • The funds in your short term fixed deposit are considered as security by the government of India

  • The amount in your short term FD investment can also be used as margin money for non-fund based services

  • A short term FD offers a higher rate of return with great liquidity

  • Another interesting advantage of a short term fixed deposit is that you can take a loan against your FD equivalent to as high as 95% of the funds in your account. You can take this loan without needing a guarantor or any extra paperwork

Eligibility Criteria and Documentation for a Short Term FD

The eligibility criteria of a short term fixed deposit vary from bank to bank. Here is a look at the details about eligibility and documentation required for starting a short term FD.

 

  • To start a short term FD account, most of the banks require you to have a savings account with the same bank

  • In this way, you don’t have to collect the interest amount in person as it will be directly credited to your savings account

  • The short term FD investment is open for only Indian residents. However, there are some banks that offer short term fixed deposits for Non-Resident Indians (NRIs) as well

  • To open a fixed deposit account, you will need basic documents like your address proof and identity proof like Aadhaar card, PAN card, among others, and passport size photographs

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