It’s a known fact that Fixed deposits (FDs) are one of the safest and simplest ways to grow your savings. With assured returns and flexible terms, they appeal to a wide range of investors. However, before you invest in one, it’s important to know some critical factors to make the most on your investment.
In this article, we will look at key factors one should consider before opening a fixed deposit account.
1. What is the Minimum Deposit Amount?
Before opening an FD, it’s important to know what the minimum deposit amount is. This varies from one bank to another. For instance, DBS Bank offers fixed deposits with a reasonable starting amount of INR 5,000, ensuring that investors of all sizes can benefit. Checking this requirement early helps you plan your finances better.
2. How Do I Choose the Right Tenure?
FDs are available for durations ranging from a few days to several years. The tenure you pick depends on your financial goals. Whether you are planning to invest for your short-term goals or building wealth for longer tenure. Consider using tools like a fixed deposit interest rate calculator that can help you estimate returns across different terms. DBS Bank, for example, has flexible FD tenure, making it easier to align with your plans.
3. What Are the Interest Rates and Payout Options?
Interest rates can significantly influence your FD’s returns, so it’s crucial to compare rates before investing. DBS Bank stands out with competitive rates of up to 7.50% p.a. Additionally, also check how interest is earned on your principal amount whether it is monthly, quarterly, or upon maturity. This flexibility helps you match payouts to your financial needs.
4. Are There Tax Benefits to Consider?
Fixed deposits can be a smart choice for reducing taxable income under Section 80C of the Income Tax Act. However, they come with a lock-in period of five years. It’s also important to remember that the interest earned on FDs is taxable. Knowing the tax implications will help you decide if a tax-saving FD is right for you.
5. Can I Withdraw the FD Prematurely?
During unpredictable circumstances, you might need to access your funds before the FD matures. Most banks allow premature withdrawals.It’s important to know that withdrawing your funds prematurely often incurs certain penalties. These penalties can be in the form of either a reduction in the interest rate earned on your deposit, or a direct penalty fee applied to the amount being withdrawn.It’s important to check the policies on premature withdrawal of fixed deposit, so you know the terms upfront and can make an informed decision.
6. Can I Get a Loan Against My Fixed Deposit?
An FD can be a useful asset when you’re in need of funds. Many banks, including DBS Bank, offer loans against FDs. This allows you to address financial emergencies without breaking your deposit prematurely, preserving the benefits of your investment. Be sure to check the terms and conditions of securing an overdraft or loan against your fixed deposit, including the repayment timeline and applicable charges, to make an informed decision.
7. Why Choose DBS Bank for Your Fixed Deposit?
DBS Bank combines competitive interest rates of up to 7.50% p.a. with customer-friendly features like flexible tenures and customizable payout options. Opening your account is convenient by opening FD online whichmakes managing your investment hassle-free and automate feature of reinvestment of FDs upon maturity provide added financial flexibility.
Conclusion
Fixed deposits are a straightforward and dependable investment option. By considering factors such as tenure, interest rates, tax benefits, and withdrawal policies, you can choose the best FD for your needs. DBS Bank, with its attractive rates and easy-to-use services, is an excellent choice to help you grow your wealth securely. Use a fixed deposit interest rate calculator today to explore your options and take the first step towards a brighter financial future.