These investment tools are secure options that provide guaranteed returns and cater to different financial needs. Time Deposits or Term Deposits often allow more flexibility in terms of
Compare time deposit or term deposit vs fixed deposit based on the below parameters to understand how they differ and their key features:
Basis of Difference |
Fixed Deposit |
National Savings Time Deposit Account |
Issuer |
Issued by banks, Non-banking Financial Institutions (NBFCs), Housing Finance Companies (HFCs), and other financial institutions |
Offered by India Post |
Tenor |
Ranges from 7 days to 10 years |
Available tenors of 1, 2, 3, or 5 years only |
Interest Rates |
Varies across issuers with some offering up to 9.40% p.a. |
Up to 7.50% p.a. as per August 2024; interest is calculated quarterly |
Safety of Deposit |
FDs offered by banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) by up to ₹5 Lakhs per depositor; NBFC FDs are rated by credit rating agencies, like CRISIL and ICRA, based on their financial well-being and ability to make payments |
Since the Government backs this type of deposit, it is a secure investment |
Minimum Investment |
Some issuers have a minimum requirement starting from ₹1,000; varies across banks and NBFCs |
Starts from ₹1,000 and in multiples of ₹100 |
Interest Payment Frequency |
Monthly, quarterly, semi-annual, or annual frequencies |
Annual |
Choosing between time or term deposits and fixed deposits requires a clear understanding of your financial goals and priorities. To make an informed decision, consider how each option aligns with your goals, and use an interest calculator to estimate potential earnings and compare the benefits of each option.
Here are some factors to consider when considering your investment options:
Investment Flexibility
FDs offer flexible tenors and higher interest rates, which could make them a good option if you’re seeking better returns. They require a lump sum investment, which may be ideal if you have funds ready to invest.
Safety and Stability
Since the National Savings Time Deposit is backed by the government, it offers an added layer of security. If safeguarding your principal investment is your top priority, time deposits could be more appealing.
Interest Earnings
Use an FD calculator to estimate your interest earnings under each option. This quick calculation can provide clarity on which investment aligns better with your financial goals.
Ultimately, the choice should reflect your financial strategy, whether you seek flexibility and higher returns or prioritise safety and long-term stability.
Frequently Asked Questions
What is the major difference between time and fixed deposits?
The primary difference between these deposits is the issuing entity. FDs are issued by banks, NBFCs and financial companies. In India, the National Savings Time Deposit Account (TD) is offered by India Post.
Is a time deposit and fixed deposit the same?
They are similar savings schemes where you deposit a lump sum for a fixed period of time for a fixed rate of interest. They differ in terms of the issuer, choice of tenors, and interest rates.
What is a time deposit account?
The National Savings Time Deposit Account (TD) is offered by India Post. It allows you to make a lump sum investment and earn guaranteed returns. As per your goals, choose a tenor of 1 year, 2 years, 3 years, or 5 years.
What are the cons of time deposits?
One limitation of the National Savings Time Deposit account is that you cannot close it within the first 6 months. If you close the account before it matures, the interest you earn will be reduced, affecting your overall returns.
Where can I get a time deposit?
You can book the National Savings Time Deposit Account (TD) on the official website of India Post. You can open an account as an individual or a joint account with up to 3 adults.
How to purchase a time deposit?
To open a National Savings Time Deposit Account (TD), you can visit a branch of India Post or create an account on the website. Fill in the application form and transfer the amount you want to invest.
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