What is Fixed Deposit? Meaning & Types of Fixed deposits in India

Short Answer

A fixed deposit is quite a common investment option provided by banks to help boost our savings. You deposit certain sum of money with the bank and earn interest on it. However, there are many types of fixed deposits or FD's. To learn more, we have useful details provided it here.

Detailed Answer

Fixed deposits are very popular fixed return-low risk investment schemes wherein an investor fixes an amount for a said period of time. No doubt, Fixed deposit or FD has been a highly preferred choice amongst people of India. And, this trend is being followed since decades. Do you agree to it?

Each one of us or our parents or grandparents might be having an FD for sure. Since this has been regarded as a safe investing option giving fixed returns over the years.

Now, depending on the bank policy, a fixed deposit can be opened as:

  1. Cumulative Fixed Deposit (Paid at maturity)
  1. Non-Cumulative Fixed Deposit (interest paid on regular intervals)

Interest rate for fixed deposits depends on RBI policy and bank notification. It usually ranges from 6-8% p.a. (pre-tax return). This may be slightly higher for senior citizens.

Tax Saving Fixed deposit: In case the investment under this scheme for a period of 5 years and more, then the individual can claim tax exemption benefit under Section 80C up to Rs.1.5 Lac of Income Tax Act.

Recurring deposits are again fixed return-low risk investment schemes wherein an investor agrees to deposit decided sum of money on a monthly basis. This is very popular scheme in India wherein Indian families save some amount on monthly basis.

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