How Your FD Account Can Be Your Next Asset

How Your FD Account Can Be Your Next Asset

02 January, 2023

A Fixed Deposit is one of the safest wealth creation avenues in the country for any individual because it guarantees a fixed interest rate for the deposit period and a defined income. Besides this, banks offer a special interest rate on Fixed Deposit for senior citizens and FD holders can even enjoy income tax benefits.

This deposit shines as a dependable asset and is a reliable option to safely lock away your surplus funds and generate income on it. You can also choose the cumulative deposit option and earn the interest collectively when your deposit matures, thus creating a lumpsum corpus.

Continue reading if you are wondering how an FD can be an asset for you:

  • The usual perception of a Fixed Deposit is that one’s money needs to be kept away for a long time. That is not the case. Most banks offer FDs for a few days i.e., minimum 7 days, as well. If you have a large amount of funds lying idle, it makes sense to keep it in this deposit for a few days or weeks and let it earn interest at higher rates. You can also calculate the interest on funds you’re investing using the FD calculator. Most banks allow you to auto-renew the principal and interest amount in this FD, which reduces the hassle of maintaining the account. Another essential feature is that an FD can be started with an amount as low as ₹5000.

  • Most banks offer a sweep-in facility. As most Savings Accounts earn a very low interest, by opting for the sweep in facility, all funds above a pre decided amount get converted to this account. All your idle funds earn higher interest rates than those offered on Savings Account deposits. Also, Fixed Deposits are incredibly safe as they prevent your capital amount from eroding, and you can liquidate them anytime using the premature partial or complete renewal facility.

    You can read more about the Fixed Deposit sweep in – sweep out facility here.

  • Most FDs have a monthly interest pay out feature if you’re looking at earning a monthly income. As a part of this feature, the interest on the deposit is paid out to the Savings Account on a monthly basis. This helps you earn income even though the funds are locked.

  • Fixed Deposits up to ₹5 lakh are insured with the Deposit Insurance and Credit Guarantee Corporation of India (DICGC). This makes it an insured asset to have.

  • Fixed Deposit interest, only attracts TDS if the interest payable or reinvested on RD and FD per customer across all branches, exceeds ₹40,000/- (₹50,000/- for senior citizens) in a financial year. For interest below that amount, no tax is deducted. This gives all the account interest in your hands.

Fixed Deposits are excellent assets to have especially when the market is uncertain. They work similar to liquid funds, and can be liquidated prematurely as well.

You can book your Fixed Deposit through an HDFC Bank Savings Account. New customers can create a Fixed Deposit by opening a new Savings Account, while existing HDFC Bank customers can create their Fixed Deposit by clicking here.

So, have you created a Fixed Deposit account yet?? Click here to get started.

​​​​​​​*Terms and Conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.

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