Fixed Deposit

A Fixed Deposit (FD) is a popular investment option offered by banks and financial institutions, where an individual deposits a lump sum of money for a fixed period at a predetermined interest rate. Unlike savings accounts, FDs provide higher returns and are considered safe because they guarantee both the principal and interest. The tenure can range from a few days to several years, and interest can be withdrawn periodically or at maturity. Premature withdrawals are possible but may attract a penalty. FDs are especially preferred by risk-averse investors and senior citizens who often receive higher interest rates.

Key Points

• Lump sum deposit for a fixed tenure.
• Offers higher, fixed interest rate compared to savings account.
• Safe and low-risk investment with guaranteed returns.
• Premature withdrawal allowed but with penalty.
• Tenure usually 7 days to 10 years.
• Senior citizens get extra interest rates.
• Can be used as security for loans/overdraft.