Fixed Deposit Investing: 10 Important Things You Should Know Before Investing in FD

September 18, 2019


While Fixed Deposits (FDs) are one of the easiest investments, there are still many things that one should know before opening an FD account. Check out this post to identify 10 of the most important things you should know before investing in FD.


No matter what type of investments you select, it is essential to know as much about them as possible to make sure that your capital remains protected and you earn the expected returns. While FDs are not as complex as other investment options, there are still several things that an investor should know before opening an FD account. Ten such essential things to know before investing in FD are as follows:

1. Interest Rate

As banks fix their own interest rates on Fixed Deposits, it is essential to compare the rates offered by different banks before opening an FD account. Only trust a reputed bank that offers a competitive rate for your investment.

2. Interest Rate for Seniors

Seniors are offered a slightly higher Fixed Deposit interest rates as compared to regular investors. If you are a senior citizen or looking to open an FD for your senior parents or family members, make sure that you do check what rate the bank offers on FD for senior citizens.

3. FD Tenure

To suit the needs of different investors, banks now offer FDs for 7 days to 10 years. Select the tenure carefully as you will be required to remain invested in the account for the selected duration. Even the interest rate varies based on the FD tenure.

4. Minimum Account Balance

You should also check the minimum amount that you need for opening an FD account. Most of the top banks allow you to open FD for as little as Rs 10,000. If you are opening an FD account for a minor, the minimum balance is generally Rs 2,000. You can also use a Fixed Deposit calculator to know how much your FD amount can earn at the end of the tenure.

5. Maturity Date

You can also find the FD maturity date on the receipt that you receive for opening an FD account. If you are opening an FD account for a particular purpose, like gifting it to your child on his/her birthday, double check the maturity date to make sure that the FD matures at the right time.

6. Premature Withdrawal Penalty

Fixed Deposit investment comes with early withdrawal facility with the help of which you can make a partial or complete withdrawal from your FD account even before the maturity date. However, you are required to pay the penalty for the same. Do check this penalty as well before opening the account.

7. Auto Renewal

Many banks now also offer FD auto renewal facility. With the help of this facility, your principal amount, as well as the accrued interest, is re-invested for a duration of your choice. If you have opted for this facility, the same will be mentioned on account opening receipt.

8. Interest Payout

You can also select the interest payout frequency of your choice with FD investments. Most banks offer monthly, quarterly, half-yearly, annual and full tenure interest payout options. If you are looking for FD investment tips, select the interest payout frequency carefully to meet your investment objective.

9. Nomination Facility

When you open an FD account, you will also be required to choose a nominee. In the event of your unexpected demise during the FD tenure, your nominee will receive the FD amount. The details of the selected nominee are also mentioned on the account opening receipt.

10. TDS Declaration

The bank will deduct Tax Deducted at Source (TDS) if your FD interest income is more than Rs 10,000 in a year. However, if you fall under the no income tax bracket, you will have to submit Form 15H or 15G as a declaration for the same. Make sure that your declaration is updated in the bank records, so that no TDS is deducted from your FD interest.

Invest in FDs with Complete Confidence and Convenience

Fixed Deposits are one of the safest investment options in India. Just keep the above FD investment tips in mind before opening an FD account and select a reputed bank to experience utmost convenience and safety.



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