FD Interest Rates

The Top-9 Reasons Why You Should Transfer Your Capital From Savings to an FD Account

It is hard to find an Indian citizen without a savings account where they keep the money required for everyday expenses. A savings account provides interest rates in the range of 2.5% and 6%. Moreover, you can withdraw the amount any time you need money. But, a fixed deposit or FD gives you the same benefits, and your money can grow much quicker than a conventional savings account. 

Here are the top-9 reasons why you should choose an FD scheme over a savings account. 

1. Guaranteed High Returns 

The latest FD interest rates are almost always higher than the highest savings account interest rate, and it applies to both short and long-term deposits. Unlike a savings account, which is subject to rate changes, an FD scheme allows you to lock the amount at the prevailing interest rate. Hence, your capital stays protected from the impact of rate change.  

2. No-Risk Investments

The latest FD interest rate you get from an FD scheme comes without any risk. When you invest in a bank, your investment of up to INR 5 lakh is insured by DICGC. If, however, you invest in a corporate FD scheme, invest in one which has got CRISIL FAA+ and CARE AA rating, as they are considered the safest.

3. Low Investment Amount

You can open a corporate fixed deposit account for as low as INR 10,000. However, for monthly income FD schemes, the minimum investment amount is INR 25,000. Hence, you can get the latest FD interest rates even when your investment amount is low. 

4. Flexible Term

A corporate fixed deposit account can be created for a minimum term of one year to ten years. Although many banks allow FDs for as low as 7 days, the interest rates are much lower than the latest interest rates of a one-year FD. 

5. Fixed Monthly Income

A non-cumulative FD scheme allows you to get a fixed monthly income as per the latest FD interest rates. Usually, the interest rate of a 10-years’ FD is higher than a 1-year FD. If you invest in a long-term FD scheme, your monthly income will be higher.

6. Loan Facility

If you need cash urgently and do not want to cancel the FD prematurely, you can opt for a loan against FD. A loan against FD allows you to get up to 75% of your principal amount as a loan. The interest rate charged by the lender is only 2% more than the latest FD interest rates.

7. No-Frills Account Opening

Corporate housing finance companies like PNB Housing offer doorstep account opening facility for investors investing in an FD scheme. Hence, you can conveniently open an account and get the latest FD interest rates without running from pillar to post.

8. Premature Cancellation

Like a savings account, you can withdraw money from an FD account any time you want. However, financial institutions may impose a small penalty for premature cancellation. It is better to enquire about the FD scheme charges before investing.

9. Senior Citizens Earn Extra Interest

A senior citizen FD scheme’s interest rates are at least 0.25% higher than the latest FD interest rates. Hence, you can earn considerably higher returns than a savings account.

Conclusion – An FD scheme offers the same kind of liquidity and security as a savings account. However, it enables you to get higher returns on the capital. If you still haven’t invested in an FD scheme, now is the best time to do so and earn up to 6.95% interest every year.