Basics of bank fixed deposit

A bank fixed deposit is also known as a term deposit, which earns better interest as compared to the interest that the account balance earns in a savings bank account. This is a type of financial instrument in which, a certain sum of money is placed with the bank for a specified time period at a fixed interest rate. The interest rates offered by banks on such deposits depend on the number of days, weeks or months, for which the deposit is maintained. There is great flexibility in the maturity period, which ranges from seven days to 10 years. The interest is higher in the case of a longer maturity period and can be compounded quarterly, half-yearly or annually. However, it varies across banks. The main draw for such deposits is the guaranteed interest that deposits earn. Features of bank fixed deposits 1) Eligibility You need to be a resident Indian with a savings bank account. 2) Entry age You need to be over 18 years. Minors can open a deposit with the natural guardian operating it. 3) Investments Minimum: Rs 1,000 Maximum: No limit 4) Interest Depends on the tenure of the deposit (See table for current rates). Currently goes from 2.90 per cent to 5.40 per cent per annum. 5) Tenure Currently offered up to 10 years 6) Account holding categories Individual Joint Hindu Undivided Families (HUF) not engaged in any trading or business activity. Companies or associations or trust. Minor through the guardian. 7) Nomination Facility is a

This article was originally published on November 02, 2021.