Why Going From Savings To Fixed Deposits Is A Good Decision

Unless you’re a risk-taker, most of us like to park our hard-earned money in a haven. For people in the service, a Savings Bank Account is generally where their income stay. But keeping your money idle in the Savings Account is neither good for you nor the economy.

Here’s why you should consider transferring your fund in a Fixed Deposit once you have surplus money in the Savings Account.

  1. Higher Rate of Interest

Even for a shorter tenure, the interest rate in an FD account is more attractive than a Saving Account. The rate varies by the financial institution, the age of the investor, and tenure.

PNB Housing Finance offers one of the highest FD interest rates in India. The rates are as high as 6.95%. Besides, your fixed deposit gives you a guaranteed risk-free return that is not affected by market fluctuation.

  1. Inflation-Adjusted Rates

Inflation deteriorates the value of your hard-earned money, decreasing its purchasing power. A fixed deposit scheme enables you to counter inflation by giving you a positive real rate of return. The FD rates are inflation-adjusted i. e they are in line with the rising price of goods and services in the economy.

  1. Risk-Free Investment Pool

Most investment schemes are subjected to market risk, but the same is not the case with fixed deposits. Moreover, the money deposited in an FD scheme is secured by DICGC insurance cover. Even if your bank faces bankruptcy or liquidity crisis, the DICGC (a subsidiary of RBI) guarantees account holders compensation up to Rs.5 lacs.

  1. Affordable Investment Option

You can open an FD with as little as Rs.1000. Most leading banks in India allow you to start an FD with Rs.5000 to Rs.10,000.

  1. Loan Facility

At times of financial need, you can avail loan against your FD investment. The loan sanctioned can be up to 90% of the principal amount. No processing fee is charged for a loan against FD, and the amount can be repaid as a lump sum or in installments.

What’s more, some banks also provide the facility of an FD-backed secured credit card. The credit cap depends on the amount of FD you are willing to mortgage.

  1. Higher Rates for Senior Citizens

Almost all banks offer the highest FD interest rates for senior citizens. The rate is for senior citizens is 0.25% to 1% higher than the usual interest rate. This favorable rate of interest provides much-needed financial assistance to senior citizens in their post-retirement days.

  1. Flexible Tenure

In contrast to the popular notion, FD allows enough flexibility to its investors. The tenure varies from 7days, 15 days, 45 days, 1.5 years, 3 years, 5 years to as high as 10 years.

FD accounts can also be tailored as per your need. You can opt for a recurring deposit account which allows you to deposit a specific amount for a pre-determined period regularly.

Concluding Thought

A fixed deposit scheme has much more to offer than a regular savings account. So choose wisely and get maximum return on your investment.

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