Answers to frequently asked questions about Fixed Deposits

In India, Fixed Deposits or FDs are a popular investment tool helping them save and grow their money. They are secure and offer assured and reasonable returns on the deposit amount. Hence, they are a go-to option for risk-averse investors. Several banks provide these Term Deposits. If you are considering opening one, here are some answers to popular queries that will familiarise you with this deposit.

What are Fixed Deposits?

One of the two Term Deposits available to customers, an FD, enables you to deposit a lumpsum amount for a fixed term and earn interest at pre-determined FD rates. Several people believe opening an FD enables you to earn higher interest than letting your savings lie idle in a regular Savings Account.

What is the minimum tenure?

When opening an FD, a depositor can choose from flexible tenures that range from a minimum of seven days to a maximum of 10 years.

Is there a minimum amount?

The minimum amount to avail of an FD is usually Rs. 5,000. However, it is always advisable to know how much you should deposit and for how long before you avail of an FD with a reputed bank. An online FD Calculator simplifies this task and lets you determine the exact amount you will receive at maturity. This step ensures you choose the exact amount and tenure to help you reach your investment goal.

Are FDs safe?

If you choose a credible bank to open your FD, you can be assured of the safety of your investment. The maturity value of your FD is also fixed, and you will receive the exact amount if you do not withdraw the deposit before its term ends. The DICGC insures your deposit for a maximum amount of Rs. 5 lakh.

Can you terminate your FD before maturity?

Yes. Depositors can terminate and withdraw their FD anytime. However, your bank might deduct a penalty for early closure.

What is the interest rate offered?

FD interest rates generally vary across banks. The rates also differ based on the investment amount and tenure you choose.

When is the interest paid?

FD interest rates may be paid at maturity, monthly, or quarterly, depending on your chosen deposit. 

Will the deposit get reinvested automatically at maturity?

If you have chosen the option, the bank will reinvest your FD automatically.

How to open it?

Today, opening an FD is relatively easy, and you can do so conveniently using the Banking app provided by your bank. The process is time-saving and hassle-free and only requires a Savings Account with the bank. You can use the same application to manage the FD, i.e., to change or add a nominee, terminate the deposit, etc.

How many deposits can you open?

There is no limit on the total FDs you can open.