What is a Fixed Deposit – Fixed Deposit Meaning, Types and Full Form

What is a Fixed Deposit - Meaning & Types

Today in this article we will give complete information about what is a fixed deposit? FD stands for (full form) Fixed Deposit. It is a financial investment option offered by banks and financial institutions where an individual deposits a specific amount of money at a fixed interest rate for a fixed period of time, at a higher rate than a regular savings account Provides returns. A person can invest his money as per his wish on any high return giving FD. Invest your money only thoughtfully and according to your complete research.

Types of Fixed Deposit

What is a Fixed Deposit and how many types are there? There are various types of fixed deposits (FD) available for investors. Some common types of FD NISE include:

1. Standard fixed Deposits --  This is the standard FD scheme available in all banks. Some of the features are: Money is deposited for a fixed period. The interest rate is predetermined by the bank. The tenure can range from 7 days to 10 years.

2. Special fixed Deposits – This FD SBI offers 0.50% higher interest rates to senior citizens, interest rates on regular fixed deposits vary between 3.50% and 7.50% for tenures ranging from 7 days to 10 years. This FD is considered the best among other FDs.

3. Tax Savings Fixed deposits --  The tenure of tax-saving FD is fixed for five years. Although the interest earned on the FD amount is taxable, one can easily claim a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961. This makes it different from other types of fixed deposits, which do not offer this tax-saving feature.

4. Regular Fixed deposits – This is the most commonly used FD where the investor can deposit a lump sum amount for a fixed period and earn his money at a fixed interest rate. Interest is paid monthly, quarterly, half-yearly, or annually.

5. Corporate Fixed deposits -- Corporate deposits or company fixed deposits are fixed deposits in which you invest your money at a fixed interest rate for a fixed period and that money gives good returns. These are offered by non-banking financial companies (NBFCs) and other financial institutions.

 6. Senior Citizen Fixed deposits -- Senior Citizen Fixed Deposit (FD) Fixed deposit schemes with exceptional interest rates are available to individuals above 60 years of age. Plus an additional 0.40% p.a. Depending on the interest rate, these fixed deposit accounts offer a wide range of benefits to senior residents, in a very simple manner.

7. Flexi Fixed deposits -- Flexi-fixed deposit is a special type of deposit that is offered in other countries besides Indian banks. It is made up of demand deposits and fixed deposits. A depositor opting for Flexi FD is able to take advantage of both the liquidity of savings and current accounts and the higher returns of fixed deposits. Fixed deposits have been one of the most traditional and popular savings instruments in India for years.

What is Onecard fixed deposit?

What is FD, FD backed OneCard is just like a regular OneCard. The only difference is that for onecard you need to create a fixed deposit with our partner bank on which you will get regular daily interest for as long as you use your card.

Who should invest in Fixed Deposit?

Fixed Deposit (FD) is one of the popular investment options for various reasons. It offers fixed returns, flexible tenure, minimal risk, tax benefits, and easy liquidity. FDs are suitable for different types of investors depending on their financial objectives and investment portfolio. Here are the types of investors who should invest in fixed deposits:

1. Short-term goals: Investors with short-term goals can invest in fixed deposits to achieve their financial objectives. FDs offer flexible tenures ranging from a few days to a few years. Investors can use the interest earned on investments to meet their short-term financial goals in a very convenient way.

2. Retirement planning: Those looking for a low-risk option to build a retirement corpus can invest in fixed deposits. This investment provides a guaranteed and regular source of income to retirees and protects their savings from market fluctuations.

3. New Investors: FD is a considered investment option for new investors interested in learning about fixed-income instruments. In this investor can start with a small investment and gradually increase his stake.

4. Emergency Funds: FDs can be a useful investment option for setting aside emergency funds. They offer higher interest rates than savings accounts and easy liquidity with premature withdrawals.

5. Conservative investors: FD is an ideal option for investors who prefer low-risk and safe investments. Conservative investors want to avoid the fluctuations in returns that come with risky investment products.

Features and Benefits of Fixed Deposit

What is Fixed Deposit and its benefits are given below. 

    1. Returns are profitable and not quickly affected by market fluctuations.

    2. Senior citizens often get higher interest rates on FDs.

    3. FD can be renewed easily.

    4. Loan against FD is available up to 75% of the amount deposited on FD.

    5. The risk of loss of principal is negligible.

  6. You can opt for periodic interest payments to manage your monthly expenses.

  7. FD interest rates offered by NBFCs are higher than banks.

  8. As per the Income Tax Act, of 1961, tax is deducted at source on interest income. If your total income is taxable, you can avoid TDS by submitting (Form 15G, and Form 15H if you are a senior citizen).

 

Frequently Asked Questions

 1. What is the meaning of fixed deposit?

The full form of FD is a fixed deposit. FD is a type of investment in which a person invests a lump sum amount in a bank for a fixed period. The amount deposited in FD receives interest at a fixed rate, which is determined at the time of opening the account.

 2. In how many years does Fixed Deposit double?

You are getting 6.5 percent interest on 7 year FD. You want to know how many years will it take for your invested money to double. In such a situation, apply this formula and divide 72 by 6.5. 72/6.5 = 11, meaning your invested money will double in this number of years.

 3. Full form of Fixed Deposit?

   FD has full from fixed deposit.