Fixed Deposits
Types of FDs
There are different types of FDs for investors to choose, based on their investment goals, tenure, and investment amount. These are:
- Standard FD
- Cumulative FD
- Flexible FD
- Tax-Saving FD
- Non-Cumulative FD
Factors Affecting FD Interest Rates from Banks
Fixed Deposit Alternatives in India
Investors looking for similarly stable instruments can consider the following alternatives to FDs:
How to find the right FD?
- For investors choosing a Corporate FD, checking the CRISIL and ICRA ratings can give you a good indication of whether you are choosing companies that are likely to keep your funds safe.
- Public sector vs Private Sector Banks: The year-on-year profits of Public Sector banks has historically been higher than Private Sector Banks2. As a result, investors with a very low risk tolerance should pick Public Sector Banks to ensure the safety of their funds.
- Premature withdrawal clause: Understanding the premature withdrawal clause is critical, as some banks may leverage a penalty of withdrawing before the tenure is over. This penalty amount can vary from bank to bank. It is wise to choose a bank with the lowest penalty, so that the amount can be withdrawn during an emergency without any added financial pinch.
Frequently Asked Questions on Fixed Deposits
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Disclaimer
¹ https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/67TFC7E3F7A27E6422282350DA4A5E590C6.PDF
² https://www.business-standard.com/article/opinion/good-show-by-private-banks-better-by-psbs-121082200801_1.html
³ Provided all due premiums are paid.
^ Scenario: Rs. 5,00,000 Single Premium (Exclusive of GST). Male, Age 35, Plan Option A, Policy Term : 10 years
ABSLI Fixed Maturity Plan is a Non- Linked Non- Participating Individual Savings Life Insurance Plan (UIN: 109N135V01)
ADV/8/22-23/1086