Bank Fixed Deposits are one of the most common saving avenues in India. Read about opening bank fixed deposits account in India

Bank Fixed Deposits

Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from 15days to 5 years. The interest can be compounded quaterly, half-yearly or annually and varies from bank to bank. Minimum deposit amount is Rs 1000/- and there is no upper limit. Loan / overdraft facility is available against bank fixed deposits. Premature withdrawal is permissible but it involves loss of interest.

Things to Remember Before Opening a FD Account
Before opening a fixed deposit account, check the financial position of the bank. Also, try to check the rates of interest for different banks for different periods. Instead of putting a big amount in one fixed deposit, keep the amount in five or ten small deposits. This way, in case of any premature withdrawal of partial amount, then only one or two deposits may need to be prematurely encashed. Thus, the loss of interest will be less than if a single big deposit were to be encashed. Check deposit receipts carefully to ensure that all details have been properly and accurately filled in. Do not leave the renewal column unfilled. Otherwise, on maturity the fixed deposit amount will go back into an FD. Before investing in a FD it is important to consider the rate of interest and the inflation rate. A high inflation rate can eat into your real returns. So, it is vital to have a look at the inflation rate before arriving at the real rate of interest.

Advantages of Fixed Deposit
Tax Implications
How To Open a Bank Fixed Deposit Account
You can open a FD account with any bank, be it nationalized, private or foreign and make the deposit. However, some banks insist that you open a savings account with them to operate a FD.