Fixed deposits play a significant role in the investment portfolios of both conservative and adventurous investors. The reason why they are attractive to investors of all categories is that they offer substantial returns despite being low-risk instruments.
With the advent of online banking, fixed deposits have become even more accessible. You can now open an FD with a few clicks and in possibly lesser time than required to decide on what to watch on Netflix. That said, what are the factors to consider while opening a fixed deposit account and how can you go about it?
Read on the blog to know.
Factors To Consider While Investing in A Fixed Deposit
● Deposit Amount
Most banks have a minimum and maximum amount that you can invest in a fixed deposit. These thresholds could also vary depending on whether or not you are an accountholder of that bank.
● Tenure
You can choose a tenure for your FD from anywhere between 6 months to 10 years, depending on your bank. Your chosen tenure will have an impact on the interest rate your FD will earn.
● Interest Rate
The interest rate offered for your fixed deposit account can differ based on your bank. While a longer tenure earns a higher rate, shorter FDs offer slightly lower rates. Most banks also offer higher interest rates for senior citizens.
● Interest Pay-out
Most banks let you choose how you want to receive the interest. You can choose to receive the interest amount in your savings account monthly, quarterly, semi-annually, or annually. You can also decide to open a cumulative fixed deposit and reinvest your entire interest amount back into the FD at the end of the tenure.
These four parameters decide your returns on the FD. To get a clear picture of how these four factors affect your returns, you can visit your preferred banking partner’s website and use their online FD calculator. You can modify the parameters as you wish and find out exactly how much you can expect in return. This will help you choose a combination that maximises your returns while aligning with your financial goals.
How To Open a Fixed Deposit Account Online?
Most banks let you open an FD even if you are not an account holder, but with some restrictions. Below are the steps you can follow to open a fixed deposit account online with a bank of your choice:
Step 1: Visit the bank’s website and head over to the FD section and click on the “Apply” button.
Step 2: Verify your Aadhar card and PAN card details.
Step 3: Fill in your personal details in the online FD form.
Step 4: Fill in the fixed deposit terms you want to opt for.
Step 5: Complete the e-verification of your KYC via a video call
Step 6: Transfer money to the fixed deposit account.
If you are an existing account holder of the bank, then the process may be even simpler where you can apply for a new FD through your internet banking ID.
Who Can Apply For an FD?
Any Indian citizen above the age of 18 who holds a valid PAN and Aadhar card can invest in a fixed deposit. This ease of access is what makes it the most popular investment tool even today.
Conclusion
A fixed deposit is one of the least risky investment options preferred by amateurs and professionals alike. With some research, you can open an FD online that gives you the best interest rate in the market. By spending a few minutes and transferring the money in your savings account into a fixed deposit account, you can start earning a much higher interest almost instantly. So go open your FD today!
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