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2 mins Read | 2 Months Ago

What is a Term Deposit - Difference between Term Deposit and FD

Difference between Term Deposit and FD

 

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.

Understanding Term Deposits vs Fixed Deposits

Term Deposits and Fixed Deposits share similarities as both are secure investment options with fixed interest rates. A Term Deposit offers flexible tenure and has minimum deposit requirements while a Fixed Deposit has a longer tenure and offers benefits of compound interest.

Exploring ICICI Bank Fixed Deposits

ICICI Bank offers a range of Fixed Deposit options catering to the diverse needs of investors. With competitive interest rates, ICICI Bank FDs provide higher returns, with interest up to 7.75% per annum for senior citizens. Customisable tenures ranging from 7 days to 10 years provide ample flexibility to align with each investor's financial goals.

Here are some additional features: 

Assured returns: ICICI Bank FDs offer safety, liquidity and assured returns, making them an ideal investment choice.

Instant FD creation: Investors can create an FD online within 60 seconds, enhancing convenience and accessibility.

Instant liquidity: ICICI Bank provides Overdraft facility of up to 90% of the FD value, offering instant liquidity during emergencies.

Flexible tenures: Investors can tailor their investment tenures as per their goals, ranging from short-term to long-term options.

Comparing 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.

Suitability for investors

Term Deposits may suit short-term investors while Fixed Deposits cater to a broader range of investors, having short-term to long-term investing goals.

The customisable features and higher returns offered by ICICI Bank FDs make them appealing to investors seeking stability and growth potential for their investments.

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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