Know The Different Types Of Fixed DepositsPosted by Shashank Bhaskar on March 14th, 2022 When it comes to investment options, people usually opt for a Fixed Deposit. It is safe and guarantees good returns. Besides, it also earns you higher interest by just investing a sizeable amount for a fixed period. It has many types. Each caters to a specific financial situation and need. Hence, know them better to reap the most benefits. For example, if you are a risk-averse person, a regular FD would not suffice FOR your requirements. But a Tax-Saving FD will. Normal Fixed Deposits This complies with the standard scheme. The depositor must invest the said amount for a fixed tenure. The duration may range between seven days to 10 years. This FD is ideal for new investors. It follows a simplistic approach and is easy to understand. Cumulative Fixed Deposits It helps you grow your savings substantially. In this scheme, the interest gets compounded every quarter or year. The depositor then receives it at the time of maturity. Such FDs do not give you a regular cash flow. Hence, they are suitable for investors who wish to save for their long-term goals. Non-Cumulative Fixed Deposits This is yet another great FD option. It pays the depositor the accrued interest regularly. The duration varies from monthly to quarterly. In some cases, it may be even semi-annual. Therefore, Non-Cumulative FDs work well for investors who want regular pay-outs. Also, they are somewhat like a Recurring Deposit concerning the scheme structure. Tax-Saving Fixed Deposits Tax-saving FDs are popular amongst low-risk investors. They are exempt from taxes on the principal deposit amount. The lock-in period of such FDs is five years, within which you cannot withdraw the amount. Also, such FDs only allow one-time lump sum deposits. Senior Citizen Fixed Deposits A Senior Citizen FD Account is meant for aged individuals. It applies only to those above 60 years of age. It has a flexible tenure to accommodate the needs of elderly investors. Such FDs also have special interest rates. This way, they help senior citizens get a steady and reliable income stream in their post-retirement years. Flexi Fixed Deposits This operates around your Bank Account. For example, say you hold a Savings Account. Now, your Flexi FD gets linked to this account. This way, your funds shuttle between both the FD and Savings Account. The depositor must manually add money to the Deposit Account in such FDs. Make sure to choose them based on your needs and open them through your Banking app. Like it? Share it!More by this author |