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2 mins Read | 7 Months Ago

Term Deposit Vs FD - Difference Between Term Deposit and FD

What Is A Term Deposit - Difference Between Term Deposit And FD

 

What is a Term Deposit?

A ‘Term Deposit’ is simply a deposit that is locked-in for a certain term. By this logic, Fixed Deposits (FDs) and Term Deposits are the same. But that is not all, Term Deposits also cover other products such as Recurring Deposits, Post Office Deposits, Foreign Currency Deposits and Senior Citizen Deposits.

Both terms typically denote deposits made by customers with financial institutions for fixed periods of time at predetermined interest rates. Both are relatively low-risk and are offered by banks and other financial institutions to customers looking to earn stable returns on their savings. Common key features include a fixed tenure, a fixed rate of interest, a maturity date and penalties for premature withdrawals. However, both may vary slightly depending on the financial institution.

Read on to know more about Term Deposits and Fixed Deposits and the differences between the two.

Difference Between Term Deposits and Fixed Deposits

Both Term Deposits and Fixed Deposits offer fixed interest rates, ensuring stable returns. They also provide competitive interest rates and customisable tenures, offering investors greater flexibility.

While Term Deposits may offer varying termination dates and lower interest rates, ICICI Bank Fixed Deposits stand out with comparatively higher interest rates.

Features

Term Deposit

Fixed Deposit

Interest rates

Can have both a fixed or variable rate based on the market conditions

Has a fixed interest rate throughout the tenure

 

Deposit tenure

Varies based on the deposit type

From 7 days to 10 years with ICICI Bank

Charges on premature withdrawal

Yes

Yes

Flexibility 

More flexible as compared to most FDs

ICICI Bank FDs offer similar flexibility

 

Returns

May yield lower returns

Much higher returns

Renewability

Cannot be renewed

Can be renewed

Investor suitability

Short-term investors

Both short and long-term investors

 

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