Fixed Deposit, or time deposit, is a savings account offered by banks and financial institutions in India where the depositor agrees to keep a fixed amount of money in the account for a fixed period. The most significant benefit of a fixed deposit account is that it offers a higher interest rate than a regular savings account.
Read on to find out the fixed deposit account meaning, features, interest rates, rules, and eligibility criteria of fixed deposit accounts in India.
Definition of Fixed Deposit Account
Fixed deposit account is a type of savings account where the depositor agrees to keep a fixed amount of cash in the respective account for a fixed period. The fixed period can range from 7 days to 20 years. The depositor is guaranteed a fixed interest rate for the fixed deposit duration. The interest rate can differ depending on the length of the deposit, with longer deposits typically offering higher interest rates.
Features of Fixed Deposit Accounts in India
Here are the features of a fixed deposit India account:
- Guaranteed Interest Rate: The depositor is guaranteed a fixed interest rate for the deposit duration.
- Flexible Tenure: Fixed deposit accounts have a wide range of tenures, starting from 7 days to 20 years, allowing depositors to choose a tenure that best suits their needs.
- Automatic Renewal: Fixed deposit accounts can be set up for automatic renewal. Once the fixed deposit matures, the funds will be automatically reinvested for the same tenure at the prevailing interest rate.
- Premature Withdrawal: Depositors can withdraw their funds prematurely, but there may be a penalty for doing so.
- Nomination Facility: Fixed deposit accounts come with a nomination facility, which allows the depositor to nominate a person who will receive the funds in case of the depositor’s death.
- Tax Benefits: Depositors can claim their fixed deposit interest tax benefits under Section 80C of the Income Tax Act.
Interest Rates for Fixed Deposit Accounts in India
The interest rate for fixed deposit accounts in India varies depending on the length of the deposit and the bank or financial institution where you are depositing your money.. Generally, longer deposits offer higher interest rates. The interest rate for fixed deposit accounts in India can go up to 7.55%, senior citizens can earn a higher rate of interest.
Rules and Eligibility Criteria for Fixed Deposit Accounts in India
- Minimum Deposit: The minimum deposit for a fixed deposit account in India is usually between Rs. 5000 – 10000.
- Age Limit: An individual must be 18 years or older to open a fixed deposit account in India.
- KYC: Banks and financial institutions in India require customers to complete the KYC process before opening a fixed deposit account.
- Documentation: Depositors must provide a valid government-issued ID and proof of address to open a fixed deposit account.
- Joint Accounts: Fixed deposit accounts can be opened jointly with another person.
In conclusion, fixed deposit accounts in India offer several benefits to depositors, including a guaranteed interest rate, flexible tenure, automatic renewal, premature withdrawal, nomination facility, and tax benefits. The interest rate for fixed deposit accounts in India varies depending on the length of the deposit, with longer deposits typically offering higher interest rates. To open an FD account in India, an individual must be 18 years or older, complete the KYC process, and provide a valid government-issued ID and proof of address.
Most Frequently Asked Questions (FAQs) on Fixed Deposit India.
Q: What is the minimum amount for a fixed deposit account in India?
A: The minimum amount for a fixed deposit India account is usually Rs. 10000.
Q: What is the age limit to open a fixed deposit account in India?
A: An individual must be 18 years or older to open a fixed deposit account in India.
Q: Can I open a fixed deposit account jointly with another person?
A: Yes, fixed deposit accounts can be opened jointly with another person.
Q: What is the interest rate for fixed deposit accounts in India?
A: The interest rate for fixed deposit accounts in India varies depending on the deposit length and the bank or financial institution offering the Deposit. Generally, longer deposits offer higher interest rates. The interest rate for fixed deposit accounts in India can go up to 7.55%, which is higher for senior citizens.
Also, Check: Explaining How 5-Year Fixed Deposits Work
