A fixed deposit account is a type of savings account as well as an investment account where you can deposit your money for a specified time duration, and you will be paid a fixed interest rate after the specified duration. The best way to put your money to use is by investing it in fixed deposits. By investing in a fixed deposit, you can earn and save at the same time, isn’t this great!

It is always a safer option to invest your money in a fixed deposit rather than investing it in other investments like shares or in the money market. Opening a fixed deposit account is such a quick & easy process, all you will have to do is deposit the money in your account for the specified duration and this will earn interest too. Fixed Deposits are a popular form of investment among the senior citizens as well because of the higher interest rates. The rate is generally better for FDs as compared to savings accounts and the rate of interest for senior citizens is higher as compared to other customers.

Advantages of having a fixed deposit account:

  • A fixed deposit can give more interest as compared to other savings accounts. As per the report of July 2018, Fixed deposits can provide up to 7.75% p.a. while on the other hand savings account can provide up to 6.00% p.a.
  • Fixed deposits are virtually risk-free. As long as the bank doesn’t collapse you will definitely get your money back with your interest.
  • It is very easy to raise a loan against a fixed deposit. This keeps you secure.
  • You can withdraw your FD prematurely too in case of emergency but for this, you will be charged a small penalty.
  • For senior citizens, the interest rate is even higher which is the primary reason why senior citizens opt for Fixed deposits.
  • It encourages a habit of saving money as the money you invest cannot be withdrawn for the given time.
  • It assures returns on your investment.
  • You can earn a higher interest by depositing in a fixed account rather than depositing money in savings account.
  • You do have an option of choosing the duration of fixed deposit account which ranges from 30 days to ten years.
  • One can have more than one fixed deposit account if you want to save for your different goals.
  • The fixed deposit accounts can act as a fall back for your business in case you are facing a cash crunch and you can use it to meet the cash requirements.
  • When you fixed deposit account will mature you will be paid this interest depending upon the duration that you chose.