Fixed deposits, also known as time deposits are considered as one of the safest investments that provide a greater rate of interest to the investors. An individual invests a fixed amount of money, which increases annually due to the interest provided by the particular bank and all the money is made available to the investor after the scheme matures, whose time period differs from bank to bank and from scheme to scheme. It is very important to know all about investing in fixed deposits pros and cons for which, many fixed deposit advisors who guide the client with their eminent advice.
Pros of fixed deposit
Some of the important benefits of fixed deposits are as follows:
- Fixed Deposits are available from Banks and highly rated corporates.
- Corporates or companies like HDFC, PNB Housing, DHFL and BAJAJ Finance usually offer higher rates than Banks.
- The rate of interest provided is usually higher than a normal savings account.
- Loans can be availed from a particular bank using the fixed deposit certificates.
- The fixed deposit account can be broken and all the money collected over a period of time can be availed.
- Certain residents can open fixed deposit accounts for a minimum of three months as well.
- There’s absolutely no need of opening a separate account in a bank for FDs.
Cons of fixed deposit
The drawbacks of an FD are few in number as compared to the benefits. Some of the important cons that one must take care about are:
- The interest is taxable as per the Tax slab of the investor.
- Occasional or regular crediting and debiting is not possible.
One ought to consult a fixed deposit advisor before investing in an FD. The terms and conditions of the different banks & Corporates and the rates of interest provided should be compared, after which, a well thought of and well informed decision must be taken.