How to Start a Fixed Deposit with the Best Interest Rates

A fixed deposit or FD is a traditionally popular saving scheme in India. In a fixed deposit, an individual has the option of depositing any amount of money for any desired duration. FD’S are generally marked by high bank fd rates. Fixed Deposit schemes are available in most banks, corporate houses, and post offices. 

What is a fixed deposit?

It is an investment tool (that may be either long-term or short-term) where an investor deposits their money with a financial institution of their choice. This particular scheme has traditionally enjoyed popularity because it is one of the safest investment options available. Depending on deposit tenure, some investors can also claim tax deduction under section 80C.

Why should you go for a fixed deposit?

An FD has the following features :

With the fixed deposit, your money is safe for an extended period, and at the same time, you can expect steady returns as well. Tax benefits – If you are looking for a way to save on taxes, opening an FD may be one of your options. A fixed deposit with a lock-in period of five years helps you in saving on income tax. You can invest up to 1.5 lakhs to claim a tax deduction.

Interest amount – It depends on how much you want to deposit, the interest on your fixed deposit is paid annually, semi-annually, monthly or quarterly. The account used to make the sediment holds the interest amount as well. Receipt – After you have deposited your money with a financial institution, you will be provided with an e-copy of your FD receipt. One-time investment – In an FD, money is stored as a lump sum. If you have money with no urgent expenditure shortly, choosing to invest the amount in an FD would be a good option.

Is an FD a good option for you?

An FD is, without a doubt, the right choice for individuals with extra money in hand. With a fixed deposit, returns are uniform, and there is assured capital protection. But the profits obtained from an FD are not high enough when compared to other investment options.

An FD is best suited for individuals who are reluctant when it comes to taking risks in their investments. Here, you have assured and predictable returns. The rate of interest provided depends on tenure. Therefore, a higher mandate ensures better profits.

It is a good investment option for senior citizens with their retirement money, as most banks provide senior citizens with a slightly higher percentage of interest rate irrespective of deposit tenure.

How to start a Fixed Deposit?

There are two ways to open an FD – offline and online

Offline method

You will have to fill the form to open an FD. Then, visit the bank/post office to submit the form along with address proof, identity proof, and passport size photographs. Once you deposit the amount, an FD receipt will be issued. Once your FD account matures, either the revenue can be redeemed, or the tenure can be extended. If you already have a savings account and current account with the financial institution, the FD amount may be paid through a cheque.

The required documents to open an FD through the offline method

PAN card (mandatory if the deposit is over Rs 50,000)PassportTelephone billVoter ID cardAadhar cardElectricity billDriving licenseBank Statement with ChequeGovernment ID card certificate/ ID card issued by Post officiation card

Online method

This is way easier and simpler compared to the offline mode. In fact, if you choose to do it online, there is only one step involved. 

You should have activated the internet banking facility for your bank account — log in using your credentials. Under the deposits section in your dashboard, you can choose to open any deposit scheme from the available ones. There is no need to complete KYC.

A fixed deposit or FD is a traditionally popular saving scheme in India. In a fixed deposit, an individual has the option of depositing any amount of money for any desired duration. Fixed Deposit schemes are available in most banks, corporate houses, and post offices.

What is a fixed deposit?

It is an investment tool (that may be either long-term or short-term) where an investor deposits their money with a financial institution of their choice. This particular scheme has traditionally enjoyed popularity because it is one of the safest investment options available. Depending on deposit tenure, some investors can also claim tax deduction under section 80C.

Why should you go for a fixed deposit?

An FD has the following features :

With the fixed deposit, your money is safe for an extended period, and at the same time, you can expect steady returns as well. Tax benefits – If you are looking for a way to save on taxes, opening an FD may be one of your options. A fixed deposit with a lock-in period of five years helps you in saving on income tax. You can invest up to 1.5 lakhs to claim a tax deduction. Interest amount – Depending on how much you want to deposit, the interest on your fixed deposit is paid annually, semi-annually, monthly or quarterly. The account used to make the sediment holds the interest amount as well. Receipt – After you have deposited your money with a financial institution, you will be provided with an e-copy of your FD receipt. One-time investment – In an FD, money is stored as a lump sum. If you have money with no urgent expenditure shortly, choosing to invest the amount in an FD would be a good option.

Is an FD a good option for you?

An FD is, without a doubt, the right choice for individuals with extra money in hand. With a fixed deposit, returns are uniform, and there is assured capital protection. But the profits obtained from an FD are not high enough when compared to other investment options.

An FD is best suited for individuals who are reluctant when it comes to taking risks in their investments. Here, you have assured and predictable returns. The rate of interest provided depends on tenure. Therefore, a higher mandate ensures better profits.

It is a good investment option for senior citizens with their retirement money, as most banks provide senior citizens with a slightly higher percentage of interest rate irrespective of deposit tenure.

How to start a Fixed Deposit?

There are two ways to open an FD – offline and online

Offline method

You will have to fill the form to open an FD. Then, visit the bank/post office to submit the form along with address proof, identity proof, and passport size photographs. Once you deposit the amount, an FD receipt will be issued. Once your FD account matures, either the revenue is redeem, or the extension of tenure is there. If you already have a savings account and current account with the financial institution, the FD amount may be paid through a cheque.

The required documents to open an FD through the offline method

PAN card (mandatory if the deposit is over Rs 50,000)PassportTelephone billVoter ID cardAadhar cardElectricity billDriving licenseBank Statement with ChequeGovernment ID card certificate/ ID card issued by Post officiation card

Online method

This is way easier and simpler in comparsion to the offline mode. In fact, if you choose to do it online, there is only one step which is involve. 

You should have activated the internet banking facility for your bank account — log in using your credentials. Under the deposits section in your dashboard, you can choose to open any deposit scheme from the available ones. There is no need to complete KYC.

Conclusion

FDs are a good option for investment. However, there are better options available too. One cannot expect high returns from an FD. The tax-benefits offered are also not the best. So, we recommend opening an FD for senior citizens or people who are not ready to choose more volatile options like investing in stocks. 

FDs are a good option for investment. However, there are better options available too. One cannot expect high returns from an FD. The tax-benefits offered are also not the best. So, we recommend opening an FD for senior citizens or people who are not ready to choose more volatile options like investing in stocks. 

 

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