When you put your money in a fixed deposit, you are effectively locking the sum for a set length of time. On a cumulative basis, you can earn interest on the principal balance over the term. After each specified interval, the interest earned is added to the principal amount. You can handle many FD accounts distributed across different tenures because the tenures are variable. You will be able to make a higher return on your money this way. Senior citizens are entitled to higher rates, ranging from 0.25 percent to 0.65 percent higher than the current rate.

Aside from that, NRIs can open NRE and NRO FD accounts in India. A fixed deposit account can be opened at a bank where you already have a savings account. You can open an FD account with some banks even if you don’t have a savings account with them. However, you must go through a KYC process with such banks, which requires you to produce necessary documents such as identification, proof of address, and passport-size pictures, among other things.

Types of Fixed Deposits 

Following are the types of fixed deposits:

  • Regular Fixed Deposits
  1. Put money in a savings account for a set period of time.
  2. Tenure can last anything from seven days to ten years.
  3. Interest rates are higher than those offered by a traditional savings account.
  • Tax-Saving Fixed Deposits
  1. In a calendar year, the principal deposit amount of up to Rs.1.5 lakh is exempt from tax.
  2. There is a 5-year lock-in period during which you are unable to withdraw the funds.
  3. Only accepts a one-time lump sum deposit.
  • Fixed Deposits for Senior Citizens
  1. Individuals above the age of 60 are eligible.
  2. Senior citizens are entitled to discounted pricing.
  3. Tenure options are available.
  • Cumulative FD
  1. Cumulative FD interest is accumulated quarterly or annually and paid at the maturity date.
  2. Aids in the enormous growth of your savings.
  • Non-Cumulative FD
  1. Monthly, quarterly, half-yearly, or annual interest payments are made.
  2. For retirees seeking a steady stream of income, this is a better option.