Fixed Deposit is a popular and beneficial way of investment. It offers a fixed interest rate over a chosen tenure. Besides being a low-risk investment option, it is also a great option if you want to diversify your portfolio. However, since different FDs are available, selecting the right type of FD is crucial for maximising your returns. Let us explore the various FDs in detail:
Regular Fixed Deposits
Regular FDs are the most basic and widely used FD type. They provide secure returns over the selected tenure. You get the option of selecting a tenure of up to 10 years. The interest rates available on FDs are generally higher than those offered on standard Savings Accounts.
Tax-Saver Fixed Deposits
Tax-Saver FDs are the next popular type. The interest rates offered are like those on Regular FDs. Section 80C of the Income Tax Act states that you can claim deductions of up to Rs. 1.5 lakh from your taxable income. If you withdraw your funds before the maturity period, you cannot avail of the tax benefits.
Auto Fixed Deposits
Auto FDs are very flexible. If you want access to your funds, they are ideal. You can set a limit for the balance in your Savings Accounts. When the money in your Savings Account exceeds the limit, the excess amount is automatically transferred to your FD. Moreover, if the money in your Savings Account decreases, the funds are drawn from your FD.
Senior Citizen Fixed Deposits
Senior Citizen FDs are specifically for individuals aged 60 and above. These FDs offer interest rates that are 0.75% higher than those of Regular FDs, making them an excellent choice for securing financial stability in retirement. You can also utilise an FD interest calculator to estimate your returns accurately.
Fixed Deposit Plus
If you want to invest larger sums, you should invest in Fixed Deposit Plus for higher returns. These FDs require a higher minimum deposit and offer better interest rates than standard FDs. You can choose between simple or compound interest options based on your requirements for better returns.
Digital Fixed Deposits
Digital FDs are gaining popularity due to their convenience. You can open an FD from the comfort of your home with minimal documentation. By verifying your UID and PAN details, you can instantly set up your FD account and fund it using any Savings Account.
Conclusion
With a diverse range of FD options, you can choose the one that best suits your financial goals. While benefits and interest rates vary across different types, all FDs enable you to grow your funds and earn returns effectively.
