Are you confused between opening a saving account or a fixed deposit account? Frankly speaking, the choice between a saving account and a fixed deposit is not that hard to make.
If you are a bit sceptical as to which investment mode to choose, let’s provide you a quick insight.
What is a fixed deposit account?
An FD or a fixed deposit account is a financial product or tool offered by a bank or other financial institutions.
An FD investment gives you a better ROI rate compared to a conventional saving account of a bank.
A saving account yields around 4-5% interest rates. But, an FD investment gives up to 8.10% FD interest rate ROI depending on your membership status with the lender.
The only issue with an FD investment is that you can’t access your money along with the fixed deposit interest rate gains before its maturity. If you must withdraw it before maturity, you don’t get any interest in profits.
You can initiate or open an FD account with a leading online lender with only Rs.25,000 for a period ranging 1 year and 5 years.
Banks may let you open an FD investment for a lesser amount, but they may also give you a lesser interest payout.
The fluctuating market conditions do not govern an FD investment, and you get a fixed return on your investments, unlike a mutual fund.
What’s more, your fixed deposits are also insured, and as a result, you stand to get Rs.1 lakh on your investment as an insurance security.
What is a saving account?
A saving account is a traditional account that you hold with a bank or other financial institutes, and since it’s also an interest-bearing account, you get 4-5% interest as well.
You should note that a saving account is not a financial instrument and just an interest- bearing account.
A saving account may help you access some standard services such as:
- Internet banking – lets you manage fund transfer and accounts on the go
- An ATM/Debit card – lets you withdraw money for your needs from almost any bank ATMs. You also get to use and swipe it against your offline and online shopping purposes
- A chequebook – lets you pay wherever your ATM is not accepted. You also get the ease of paying someone when you don’t have enough cash on hand
Benefits of an FD Account Over a Saving Account at a Glance
By now, it should have been clear as to which account to choose and why. If you are not yet convinced, you can have a quick look at some enticing features/benefits of an FD.
- An FD account lets you invest for a long tenor and earn profits
- Gets you a good ROI – up to 8.10%
- Great way to save money which you may spend if at your disposal
- Provides you a fixed or a stable income from large deposits
- Provides you insurance of Rs.1 lakh or your invested figure
The Bottom Line
Now that you are aware of the differences in ROI and other features of saving and an FD account, it would be easier for you to make a decision.
Want to open an FD account? Connect with a leading lender today and let your money earn huge returns!