Why an FD is always better than savings accounts

Posted by sakshi kharbanda on October 22nd, 2019

Some form of liquid cash is always available to people. Many leave it lying in a savings bank account. This is a stupid thing to do, as investing the same amount in an fd has the potential to earn high fd interest rates. There are other benefits of opening a fixed deposit as compared to letting the money sit idle in a bank account. Let us find out what they are.

 Better interest rates - The interest rate offered on a fixed deposit is always higher than that offered by a savings bank account. Even a short term FD of a few months can make your money grow at a faster pace when compared to it lying in a savings account. 

Makes you disciplined - Fixed deposits usually have an early-withdrawal penalty. This helps you to keep a check on your expenses. When you have the money in your bank account, you swipe your debit card or make ATM withdrawals as and when you wish. At times, these spends are unnecessary, and you regret later on. When the money is locked in an FD, you are more cautious and only spend when there is a crucial requirement.

Low-risk investment - The money you invest in a fixed deposit is free of market fluctuation risks. This means there is no threat to your fund getting depleted if the stock markets crash. This is one of the best reasons why investing in a fixed deposit is so beneficial. A bank account also offers steady returns, but the rate at which your money grows in a bank is much lower compared to a risk-free fixed deposit. 

Option of periodic payout - A fixed deposit can pay out the periodic interest gains to the investor. If you opt for this, you can get some financial help from your fund from time to time. This is helpful for retired people and others who rely on an FD for regular incomes. If you leave your money in a savings bank account, so such payouts are offered.

Very flexible - The fixed deposits are much more flexible than the savings accounts. A savings account does not offer any variations in the interest rates, type of savings, etc. However, when you choose a fixed deposit, you get to choose the duration. Different interest rates are available, depending on how short or long the FD is. Then, you can opt for the periodic payouts, or you can choose for the compounded interest benefits. Finally, you can opt for tax-saving fixed deposits and get some handy tax rebates. These facilities are never available on the saving bank accounts. 

In a nutshell

Be a wise investor and keep your money in a fixed deposit if it is quietly sitting idle in your bank. These days you can open an FD through your mobile banking app in a few seconds. Choose a short-term or a long-term fixed deposit, depending on your needs. Also, have multiple saving options so that you can manage your money efficiently and see your wealth grow in a safe, fast, and healthy manner. 


sakshi kharbanda

About the Author

sakshi kharbanda
Joined: August 23rd, 2019
Articles Posted: 3

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