Arguably the most popular financial saving tool – a Fixed Deposit (FD), needs no introduction. Also known as a term deposit or a bank deposit, it is usually offered by banks at a higher rate of interest as compared to a savings account, until a specified maturity date. If you have funds in your savings account that you might not need immediately and if you are not satisfied with the rate of interest offered on the savings account, then fixed deposits are a viable option to invest your hard earned money into. They are an excellent investment option for people who want to invest their surplus funds.
With the wide range of investment options available, this is a logical question. Let’s look at some of the benefits of investing in a fixed deposit:
- A fixed deposit is a safe mode of investment.
- Almost every bank offers competitive rates of interest
- Most banks allow premature withdrawal of funds, albeit for a small fee.
- Investing in fixed deposits with long tenures can help you reap the benefits of compounding of interest
- Some banks offer a secured credit card of the full value of your deposit.
- Some banks offer free life insurance cover for fixed deposit account holders.