Skip to main content

Bank Fixed Deposits

Bank Fixed Deposits
 
 Bank deposits are one of the most preferred investment options in India. It is consider safe and not risky, especially in comparison with the stock markets and mutual funds.

Here are 10 things you need to know about term deposits:

1. Types of deposits: There are two key types of term deposits – fixed deposits and recurring deposits. A fixed deposit is where you invest all your money at one-go. A recurring deposit, on the other hand, is when you invest your money in installments.

2. Fixed return: When you opt for a term deposit, you are parking your funds in a particular bank deposit for a fixed period of time. In exchange for holding your money for a longer period of time, banks offer you to pay a fixed interest. This makes a term deposit a very safe option. This interest payment acts as your profit from the investment. Also, senior citizens usually get a higher interest. Currently, fixed deposits offer interest rates up to 10.25%. Recurring deposits usually offer a lower interest rate than fixed deposits.

3. Tenure of your choice: Term deposits come with a variety of tenures – the amount of time the money is held with the bank. This could be as short as 7 days and as long as 10 years.

4. Interest payout: You can decide when you want your interests to be paid. This can be done at the end once the deposit matures. If not, you can opt for regular interest payments on quarterly, half-yearly or annual intervals. Some banks also offer you a choice to reinvest your interest payments.

5. Longer the duration, higher the return: Term deposits offer a wide variety of interest rates. It changes with the duration of the deposit. Greater the duration, larger is the interest rate offered. This is to attract investors to deposit money for as longer a time as possible. Also, the bank pays interests regularly. Over a period of time, this money can either be reinvested in the same deposit or saved in your bank account. This would earn you additional interests, thus increasing your total return.

6. Cheaper borrowing for banks: Banks usually borrow money to give out as loans. The interest payments on loans by borrowers are banks' key source of income. Banks can borrow from other banks and the Reserve Bank of India. However, these have restrictions are considered costlier. The money you deposit with your bank, on the other hand, acts as a source of cheap borrowing for the bank. However, the money in the savings accounts could be withdrawn any moment by depositors. This increases risks for the banks. For this reason, banks actively try to attract deposits to invest in term deposits. This is because, the amount in deposits are unlikely to be touched for a longer period of time.

7. Breaking a deposit: The only rule of a term deposit is that once you deposit, you cannot touch this money. If you wish to reclaim your deposit amount, you will be fined a particular sum or your total interest payment may be reduced. Sometimes, banks may only allow you to withdraw the money after a certain minimum period. Ensure you get these details before investing.

8. Overdraft against your fixed deposit: If you are in desperate need of liquid cash, and you have withdrawn all of your funds in your bank accounts, you can borrow on the basis of your fixed deposits. This is called the overdraft facility. However, there is a limit to how much you can borrow under this service. Moreover, it may not be interest-free. Check with your banks before opting for the facility.

9. Taxation of deposits: Interest payments on fixed deposits are taxable. This depends on your overall income tax bracket. For example, if you fall in the 20% income tax bracket, your interest payments would be taxed at the same rate. This is why fixed deposits are usually not preferred by those in the 30% bracket. Also, if your total interest payment in a year exceeds Rs 10,000, then the bank cuts 10% as tax deducted at source (TDS). However, if you submit the Form 15G/H to the bank stating you have no taxable income, then the bank will not deduct TDS. You can also split your term deposits across banks to ensure the interest does not exceed Rs 10,000 in a single bank.

10. Tax savings: Banks offer fixed deposits for tax-saving purposes. The amount you save in such deposits can reduce your total taxable income, and thus help you save taxes. Tax-saving deposits have a minimum tenure of 5 years and a maximum of 10 years. The government has also capped the maximum amount you can invest in such a deposit for tax purposes to Rs 1 lakh per year. However, the interest you earn will be taxable.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now