8 Types Of Fixed Deposits

A fixed deposit is an investment vehicle that is offered by banks and non-banking financial companies, where an investor can deposit money for a high interest rate than a savings account. Investors can also deposit a lump sum of money in a fixed deposit for a specified period, ranging from 7 days to 10 years. Once the fund is invested with a reliable financier, it starts earning an interest based on the duration of the deposit. The defining criteria for a fixed deposit is that investor cannot withdraw the money before maturity, but the investor will be able to withdraw them after paying a penalty.
Some of the types of fixed deposits are listed below:

1. Special fixed deposits: Here the funds are invested for a specific time period. If the money is left untouched for a specified period, investors will earn a decent interest on it than the interest paid out for a standard fd. 

2. Regular income fixed deposits: If an individual has a limited income and depend on the interest from bank deposits for their monthly expenses, this type of fixed deposit is the best for them. They can choose to have their interest paid out either quarterly or on a monthly basis. 

3. Flexi fixed deposits: These are the fixed deposits that are directly linked to an individual’s savings account. They can create a fixed deposit with the initial deposit and link it to their savings account. Investors will also be able to set a cap on their savings account and any excess will be transferred to the fixed deposit. 

4. Regular fixed deposits: A regular fixed deposit offers tenures that range from 7 days to 10 years. The longer the tenure, the higher will be the interest earned. The interest rate will be unaffected by market fluctuations as it’s set at the time of the creation of fd. 

5. Tax saver fixed deposits: The principal amount of the fixed deposit will get tax exemption of up to Rs. 1.5 lakh in a year. These are long term fixed deposits. An individual’s investment is locked for a period of five years and the funds cannot be withdrawn before the maturity date.  The individual will still get the benefit of tax deduction through these FDs. 

6. Cumulative fixed deposits: If an individual does need the interest amount for regular expenses, and they can opt to add the returns back to the fixed deposit, compounded either monthly or quarterly. The next interest cycle includes the added amount, earning the individual more on their investment. 

7. Corporate fixed deposits offering high ROI: A lot of banks, post offices and RBL banks offer high interest rates on fd than regular schemes. There is generally a minimum period of three years and the interest rate is slightly higher than the normal FD rates. These fixed deposits offer a high return on the investment, but individuals will need to choose the company with care. 

8. Senior citizen fixed deposits: This fixed deposit scheme is for people above the age of 60 years, who can easily earn an additional interest rate of 0.35%.