login-icon
mahindra-finance-logo
login-icon
  • English
  • Hindi
  • Bengali
  • Marathi
  • Telugu
  • Tamil
  • Gujarati
  • Kannada
  • Odia
  • Malayalam
  • Punjabi
|

Features And Benefits Of A Fixed Deposit Account

mahindra-finance-author

by Mahindra Finance

|

June 30, 2023

|

3 mins read

A Fixed Deposit (FD) is a type of savings instrument offered by banks and Non-Banking Financial Companies (NBFCs). It allows you to save a certain amount of money for a predetermined term. This money earns a fixed amount of interest over that period. On maturity, the entire amount - the principal along with interest - is given to you as a lump sum. 

There are several advantages of fixed deposit account. But before we look at this aspect in detail, we must familiarise ourselves with the many features of a fixed deposit account. 

Features of a fixed deposit account

  • Guaranteed returns: One of the key FD features that makes the instrument stand apart is the ability to earn assured returns. A fixed deposit is not linked to the market. The rate of interest is fixed, and you earn accordingly. There are no fluctuations or changes in your returns.
  • Choice of tenure:A fixed deposit offers plenty of options when it comes to the length of the term. You can open a fixed deposit for as little as seven days or up to a maximum of ten years. The choice is yours.
  • Online and offline methods: A fixed deposit account can be opened online from the comfort of your home or offline by visiting the branch of a bank or an NBFC.
  • Predictable interest rates: An FD has a fixed interest rate. FD rates for senior citizens are usual higher.

Benefits of a fixed deposit account

  • Low risk:One of the greatest benefits of an FD account is that it is a low-risk financial instrument. Your money is not affected by market highs and lows; it grows at a systematic pace and delivers as per expectations. This allows you to plan for your future needs without any stress.
  • Loan facility:If you ever have an unplanned financial need, such as a medical emergency, a home repair, or a child’s education expense, you can take a loan against your deposit. This is much quicker and simpler than taking a loan from a bank. You are basically borrowing from your own money and can pay it back slowly.
  • Tax savings:Tax savings are another of the many benefits of a fixed deposit account. A five-year fixed deposit is among the tax-saving instruments covered under Section 80C of the Income Tax Act 1961. This lets you claim a tax deduction of up to Rs 1.5 lakh a year on your fixed deposit account, which lowers your taxable income and saves you some money.
  • Simplicity:A fixed deposit is a simple product that has been helping people for years. It is easy to open. There are no difficult rules. It also does not require you to have a detailed knowledge of the market. Anybody can open an FD, irrespective of age and income. This makes it a good savings choice for most people.

Conclusion

Given the many useful fixed deposit features and benefits, it makes sense to check out this instrument for financial planning. You can use it to plan for various needs like a home purchase, a child’s wedding expenses, education, and more. Mahindra Finance offers you the option to open a fixed deposit online, making it easier to take a step towards financial security.

Related articles

What Is A Fixed Deposit And How Does It Work?

When people talk about investments, the first option that comes to mind is fixed deposits. But, what is a fixed deposit? If you are wondering what is an FD account all about, this article will help yo...

KNOW MORE

March 5, 2024

Rural Prosperity: Empowering Communities Through Fixed Deposit Investments

In today’s fast-paced world, financial stability is essential for individuals and communities. For those living in rural and semi-urban areas of India, access to reliable investment options that...

KNOW MORE

February 23, 2024

How To Leverage Your Fixed Deposit With A Loan Against FD

During financial emergencies, many people often find themselves in need of immediate funds. While personal loans are a common option, a loan against a fixed deposit (FD) can offer several advantages. ...

KNOW MORE

May 23, 2024