How to Save More with Fixed Deposit?


The indispensable rule of growing your savings is first to devise a monthly budget based on your income and projected expenses and utilize any surplus funds for investment – so that your money may multiply rather than sit idle in your account. The market these days will tempt you with a range of investment options – however, most of these investment avenues come with their share of risks. Fixed deposits are one source of investment that not only helps you multiply your initial investment but also inherently possesses low-negligible risk factors, helping you realize a safe return on your investments.

What is a Fixed Deposit?

A Fixed Deposit is an instrument of investment offered by both banks and non-banking financial companies (NBFCs) and is often pegged to be the safest form of investment in the market. Possessing great flexibility in terms of tenure, the tenure of fixed deposits can vary from seven days to ten years. In addition, the interest offered on such deposits is more significant than that received on your regular savings account, with options for pay-out being made available on a monthly, quarterly, or annual basis. Suppose you wish to withdraw the funds invested prematurely. In that case, the lending institution levies a penalty on the premature withdrawal, post which the remainder of the sum will be credited to your account.

Why should you invest in a Fixed Deposit?

Let us now look at some of the reasons a Fixed Deposit is an ideal, risk-free instrument of investment as compared to other investment options:

  • Assured, risk-free returns: Fixed deposits offer you the exact rate of return agreed upon during investment, differing from market-based investments, which reflect market-led fluctuations at the time of maturity. This makes FD interest rates much more secure than other instruments of investment.
  • Higher rate of return: FD interest rates offer a higher rate of return against regular bank accounts, with additional interest for senior citizens making this form of investment the most secure and reliable, even post-retirement.
  • Flexible tenure: There is a broad spectrum for the tenure of such investments, ranging from seven days to ten years – providing you with a timeframe suited to your investment needs.
  • Tax benefits: Fixed deposit investments help reduce both your taxable income and tax amount, with benefits being listed under section 80C of the Income Tax Act.
  • Loan facility against FD: If you have invested in a Fixed Deposit, you can also avail loans against it when urgently in need of funds. In case of financial emergencies, you can avail of a loan amount of up to 95% of your investment at a nominal interest rate of 0.5% to 2%.

What is the process of applying for a Fixed Deposit?

The different banks and NBFCs that offer Fixed Deposits in India have their own opening procedures. Let us look at the comprehensive list of steps you must follow before opening a Fixed Deposit:

  • First, calculate FD interest rates for different banks and NBFCs. You can use calculators from different banks like SBI, Bajaj Finserv HDFC, ICICI etc. and decide where you want to invest.
  • If already a customer there, log in with your credentials; if not, proceed to register yourself.
  • Next, start by entering your intended investment amount, tenure, and the type of FD you wish to select.
  • Then, upload the relevant documents requested (identity proof, address proof, and so on).
  • Once you have ensured the accuracy of the documents and details submitted, you may make the payment via net banking.
  • Download the receipt generated, and voila, you have now opened a fixed deposit of your choosing.