A term deposit also known as a fixed deposit (FD) is a safe investment option that allows you to choose a predetermined tenor for your invested amount. The interest rate remains constant right from the deposit date to the date when your investment matures.
Bank FDs, credit union FDs, and post office FD plan are some of your best options if you want to invest in an FD plan. Corporate FDs offered by NBFCs that come in lock-in periods between 12 to 60 months can also prove to be a good choice as higher interest rates are applicable on them.
The accumulated interest along with the principal amount can be withdrawn after the completion of the FD tenor. However, premature withdrawal is also allowed by many financial companies and banks these days. Here are some important things that you can keep in mind while applying for an FD plan:
- The FD interest rate remains the same as it is not linked with the market fluctuations. Therefore, it is advisable for you to avail a plan that comes with the best interest rate. Company FDs offer higher interest rates as compared to bank FDs. Currently, you can earn an interest rate up to 7.85% with Bajaj Finance FD.
- You can also observe that the FD plans with a longer tenor usually attract higher interest rates.
- Huge capital is not required if you are thinking of investing in an FD plan as most financiers allow you to open an FD by depositing just Rs. 25,000.
- SDP (Systematic Deposit Plan) is a unique deposit plan started by Bajaj Finance wherein you can start depositing as less as Rs. 5000 every month. The number of deposits can range between 6 and 48 and each deposit can be locked between 12 to 60 months as per your convenience. Each deposit is considered as an individual FD and therefore, you might benefit from the prevailing interest rate that is applicable on the date of deposit.
- If you want to receive interest payouts on a periodic basis instead of receiving all the accumulated interest at once then you can invest in a non-cumulative FD.
- These FDs provide monthly, quarterly, six-monthly, and yearly interest payouts depending on your financial needs.
Premature withdrawal & renewal of FD
- Premature withdrawal of FDs is possible but banks might charge some penalty for it that could range between 1 to 2% of your interest earnings.
- Renewal of FDs is also possible if you want to reinvest the returns in the same FD. For that, the option of auto-renewal is provided by some banks and NBFCs. Some financiers also offer additional interest rate benefit upon renewal. For instance, with Bajaj Finance FD you can earn an additional interest rate benefit of 0.10% upon renewal of your FD.
- Fixed deposits are considered to be traditional instruments of investment but many new and user-friendly features are getting integrated in them day-by-day especially if you look at FD schemes that are launched by non-banking finance companies.
- With the multi-deposit feature, you can now create multiple FD accounts with only one cheque. Moreover, each of these FD can be of different tenors and types.
- By investing in multiple FDs of different tenors, you can create a loop of investments, the technique is also known as laddering. This not only provides you with an opportunity of investing in multiple fixed deposits (with different interest rates) but it also enables you to fund your financial emergencies as you would be getting multiple liquidity points post-maturity of those FDs.
Apart from that, some NBFCs offer a hassle-free account opening process which can be started by filling an online FD form. Once you submit the form a representative will contact you and help you with the account opening process. Therefore, there is no need for you to step out of your house to grow your savings.
You can also find an FD calculator to estimate your monthly interest earnings and returns precisely. Make sure to invest in FDs which have received high ratings for credibility and stability by credit rating organizations like ICRA and CRISIL. This means that your savings are completely safe when you invest in such FD schemes.
Term deposits or fixed deposits are investment instruments that come with a fixed interest rate and tenor. However, there are various FD plans in the market and you must be careful while choosing them. Investing in multiple FDs at a time instead of depositing all your funds in one FD is a better choice as it allows you to ladder your investments and caters to your liquidity needs.
If you can invest a fixed amount (starting from Rs. 5000) on a monthly basis then you can also think of the Systematic Deposit Plans that are offered by Bajaj Finance. Moreover, you can also benefit from the online application process and user-friendly features offered by Bajaj Finance term deposit plans.