Grow Your Money Your Way: Exploring Fixed Deposit Options

Grow Your Money Your Way: Exploring Fixed Deposit Options

26 June 2024 | By INDIE

Are you tired of watching your savings dwindle in a regular savings account?  Interest rates just don't seem to keep up with the inflation rate. Fixed Deposits (FDs) offer a predictable way to grow your money. Offering a safe and secure way to grow your money, FDs provide a guaranteed return on your investment. However, choosing the right one can feel overwhelming with the many types of FDs available.  Let’s draw a roadmap and navigate through the different FD options and to help you select the perfect fit for your financial goals!


Different Types Of FDs

Not all savings goals are created equal and hence banks offer a variety of Fixed Deposit (FD) options to cater to your unique financial needs.  Here's a glimpse of the different types of fixed deposits available:

1. Regular Fixed Deposit

This is the classic FD, ideal for parking your money for a fixed tenure and earning a guaranteed interest rate.

2. Tax Saver Fixed Deposit (Tax Saver FD) 

This FD allows you to save taxes under Section 80C of the Income Tax Act, 1961, making it a great option for tax-conscious savers.

3. Senior Citizen Fixed Deposit 

IndusInd Bank offers special FD schemes with higher interest rates specifically for senior citizens.

4. Corporate Fixed Deposits 

A fixed deposit type that is provided by non-banking financial corporations or companies where the investors deposit funds for a fixed term, earning fixed returns at competitive rates tailored for corporate investors.

5. Cumulative Fixed Deposit

This is a fixed deposit type where the interest earned from the FD is reinvested along with the principal amount giving a compounded return at the time of maturity.

6. Non-cumulative Fixed Deposit 

In the case where you are looking for a regular recurring interest income, this kind of FD is best suited for you as this scheme allows you to choose how often you receive your interest payments: monthly, quarterly, half-yearly, or yearly.

7. Flexi Fixed Deposit 

A Flexi Fixed Deposit is linked directly to your savings account and enables easy withdrawals and additional deposits without penalties giving you the flexibility of a savings account with interest rates of an FD. 

8. NRI Fixed Deposit 

This scheme is especially designed for the Non-Resident Indians (NRI) by banks in India to allow these NRIs to deposit in Indian currency for fixed periods with attractive interest rates and various benefits tailored to their needs.

9. Sweep-in/Sweep-out Fixed Deposit 

This flexible FD allows you to automatically transfer surplus funds from your savings account into the FD, maximizing your returns.


How To Choose The Right Types of FD?

Here are some key factors to consider when choosing from the different types of FD:

1. Interest Rate 

One of the most important things to keep in mind while choosing your type of FD is the interest rate that the bank is offering as this will determine your return on investment. Make sure that you compare interest rates offered for your desired tenure.

2. Tenure (Lock-in Period) 

There is a wide range of tenures for you to pick from and you must consider when you'll need the money and pick a maturity date accordingly.

3. Premature Withdrawal Penalty

Make sure to learn about the penalty charges, if any, that are imposed in case you choose to withdraw your money before the FD matures.

4. Minimum and Maximum Deposit Amount

Different FDs may have varying minimum and maximum deposit limits.

5. Tax Implications

If tax benefit is your priority, you should choose tax-saving FDs as the interest that you earn on FDs is taxable as per your income tax slab according to The Income Tax Act, 1961.

6. Additional Features  

Some FDs offer additional features like auto-renewal facilities.  Choose an FD with features that suit your needs.  

 Also Read: Pros and Cons of Investing in Fixed Deposits

By carefully considering these factors, you can select a Fixed Deposit that aligns with your financial goals and risk appetite, maximizing your returns and securing your investment.




Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.