How are Fixed Deposits different from Savings Accounts
If you are a keen manager of your finances, there is a golden rule you must follow: make sure to set aside enough savings for a rainy day. But with all the savings and investment tools in the market, it might be hard to choose the one that suits your financial needs. Typically, you may be faced with two main contenders: Savings Account and Fixed Deposit account. Let us go through the key points that distinguish Fixed Deposits from Savings Accounts:
- Rate of interest: Fixed Deposits offer much higher interest rates on your deposit amount than Savings Accounts. You can watch your savings grow much faster in a Fixed Deposit account than with a Savings Account and expect sizeable, inflation-adjusted returns in due time.
We all know that idle money yields no returns, which is why it needs to be invested as efficiently as possible. Making the right choice when it comes to investments can be the difference between whether your money increases into handsome amounts or grows at a snail’s pace. This is determined by the interest rate of your investment tool of choice and is the significant difference between Fixed Deposit and Savings Accounts.
- Flexibility: Savings Accounts come with a set of predefined features. Across the board, Savings Accounts tend to offer similar interest rates and offer little in the way of variations. Fixed Deposits, on the other hand can be customised to suit financial needs of all kinds, whether short-term or long-term.
There is a variety in tenure for Fixed Deposits (FDs), ranging from 7 days to 10 years, and the interest rates only get better the longer you choose you keep your money invested in them. Apart from that, there is the option of choosing between cumulative and non-cumulative FDs, with the latter offering further options of monthly, quarterly, semi-annual or annual payouts.
- Liquidity options: One never knows when a financial emergency may strike. So, if you suddenly find yourself in need of immediate funds, which of these two options should you opt for? Between Fixed Deposits and Savings Accounts, the latter provides more freedom in terms of withdrawing large sums of money from your deposited savings. You can freely make withdrawals from a Savings Account, while withdrawing your savings from a Fixed Deposit is likely to attract penalties.
- Opportunity to secure loan: There is another solution to your financial emergencies that only one of these options can provide. If you ever find yourself in immediate need of funds, only Fixed Deposit accounts offer the option for you to avail of a loan against your principal amount. You can avail of a loan against your Fixed Deposit of up to 90% of the principal amount and resolve your financial needs conveniently, without having to disrupt your Fixed Deposit savings.
- Opportunity to save: When it comes to saving money, we all have our own ways of going about it. Some of us like to draw budgets, while others like to exercise greater control over their expenditure. However, one of the most effective ways of saving your finances is to set a considerable amount of money aside and let it grow, without any interruption and withdrawals. The penalties imposed by Fixed Deposits essentially acts as a way to deter you from interrupting the growth of your deposit amount and save it for a rainy day.
- Senior Citizen benefits: No one needs the benefits of money-saving facilities quite like senior citizens do. In the absence of an income post retirement, senior citizens have to rely on every single penny they manage to save in order to enjoy a comfortable future. While Savings Accounts are a great option for people with fixed incomes, it is Fixed Deposits that truly serve the needs of the post-retirement life. Moreover, Fixed Deposit accounts typically offer higher interest rates for senior citizens, helping them grow their savings substantially at a time they need it the most.
After going through these differences between Savings Account and Fixed Deposit account, if the latter seems like the right option for you, make sure to use ICICI Bank’s Fixed Deposit calculator to determine the principal amount, tenure and interest rates perfect for you. Enjoy all the benefits of a reliable Fixed Deposit account choose from a tenure ranging from 7 days to 10 years, and watch your money grow with guaranteed returns and without any market risks.
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