Since the Inception of fixed deposits, fixed deposits have been a preferred saving option for many. Every bank provides a higher rate of interest in fixed deposits in comparison to regular savings accounts.
What is a fixed deposit?
A fixed deposit is a financial term used by banks & NBFC who provide the option of depositing some amount of money with a fixed interest rate for a certain period of time. If a person already has savings, he/she may not need to create a separate account. Interest rates on FD differ from scheme to scheme.
A fixed deposit is considered a one-time investment, as we don’t need to submit money every month-end. Do note that if you try to withdraw money from the fixed deposit before its maturity date, you will have to incur some losses. Multiple banks and non-banking financial companies offer fixed deposits with different interest rates on FD.
Banking institutions are the ones who introduced the concept of fixed deposit into the market. And that’s why banks have been the leading choice of people for fixed deposits for decades. Banks want customers to invest more and more money into a fixed deposit; this is the reason why banks have lucrative interest rates in bank FD in comparison to a normal savings account and also in recent years to increase their customer base, Banks have made the process of creating and terminating fixed deposits much easier.
Any person with a bank account can apply for a fixed deposit.
The interest rate on FD offered by the bank on a fixed deposit varies on multiple factors including amount, time period, and the bank itself.
Most banks usually provide a higher rate of interest on fixed deposits of longer duration.
Corporate fixed deposits.
Multiple companies offer corporate fixed deposits; it’s just like Bank fixed deposits with a few noticeable changes. Corporate fixed deposits offer higher rates of interest but also have a higher risk rate than Bank fixed deposits.
The application procedure is almost the same as Bank fixed deposits. Just like Bank fixed deposits, it also has the concept of the maturity date, and you would incur losses if you break the fixed deposit before the maturity date, just like banks.
One major difference here is that, if the company you invested in goes bankrupt, you will lose all your money. The bankruptcy chances of corporate institutions are obviously higher than a bank; therefore, higher risk rates in corporate fixed deposits.
Some tips before investing :
Always understand the market
A person should always be inept with the latest updates on interest rates on FD. Most People know about Bank FD rates but are not aware of corporate FD.
Choose a scheme according to your financial requirements and capabilities
Evaluate all the schemes given by different banks and choose one according to your needs. You can also divide up your money and invest in multiple fixed deposits in multiple sources. This reduces the risk factor.
Post investment, review your options and improvise
Most fixed deposits are long-term, around 1-3 years. After an investment in a fixed deposit, don’t just sit back and relax, in This ever-changing market you should always be aware of changing interest rates on FD and do break your fixed deposits and invest that money in a new place if you find a better investment option.
Leading corporate FD companies providing highest interest rates on FD
- Surya Roshni limited.
- Jindal stainless limited.
- PNB housing limited.
- Mahindra Finance limited.
Top bank FD providers in India
- Allahabad Bank.
- HDFC Bank.
- ICICI bank.
Frequently asked questions
What is the difference between the interest rate offered by Bank fixed deposits versus corporate?
Both are different! Corporate fixed deposits often offer a high rate of interest.
Which among banks and corporate fixed deposits is riskier?
Corporate fixed deposits have higher risk rates than Bank fixed deposits.
Does every company offer FD?
No! Is it a hundred per cent safe to invest in corporate fixed deposits: the risk factor involved depends upon multiple factors, the most important of which is the company chosen?
What are tax benefits on corporate fixed deposits?
If the total interest annually exceeds Rs. 5000, then only TDS would be deducted.
Can an NRI apply in any corporate fixed deposits?
No. NRIs can only apply for corporate fixed deposits in specific companies.