7 It pays a fixed rate of interest until the stated maturity date. FD accounts allow the investors to have a higher rate of interest as compared to a standard savings account. Additionally, many perks come with an FD account which is why many prefer having this account.
In this article, we will take a closer look at some of the advantages of having an FD account. Read on to know more!
One of the benefits of having an FD account is that your returns are assured. As compared to the savings account, these returns are far higher. But, these returns tend to vary as per the tenure of investment. At the moment, returns that most of the banks are offering returns from 7% to 8% as per the tenure. All you have to do is, avoid breaking the FD; as the premature withdrawal will affect your returns.
Another benefit of an FD account is flexibility. Along with the withdrawals, you can also fix your money for a period of time that you wish to. Starting from 7 days to 10 years, FDs offer flexible tenure duration. However, every bank has its tenure criteria. Hence, you must adhere to it. Nevertheless, you can have an FD account in any bank, irrespective of whether or not you hold an account in it. The only thing to ensure is that you choose an FD account which best suits your financial goals instead of falling into the trap of premature withdrawals.
When it comes to financial instruments, some can give you higher returns but tend to be volatile in nature. These instruments include mutual funds, gold ETF’s, ULIP’s, and more. Hence, it becomes crucial to invest in debt instruments to cope with market risks. FDs are the best when it comes to managing market risks. This also makes them are a better financial instrument for your long-term financial goals.
Many times, liabilities arise due to uncertainty. At such moments, you may require finances urgently. When you have an FD account, you can avail for a loan against it. Banks don’t have any rule of percentage offer. But, banks generally give loans that vary from 60% to 90% of your deposit. Depending on the bank’s policy, the financial institution offers a higher amount. However, the interests charged may be higher.
One of the rules about having a fixed deposit is, you need to invest a lump sum amount for a fixed time. Similarly, premature withdrawal may attract penalties. This encourages disciplined savings.
Keeping all of these benefits in mind, FD account is certainly a saviour when it comes to growing and maintaining your finances.