People who are looking for simple and stable investment options prefer investing in a savings account or a fixed deposit plan. Though both these instruments are safe, the savings account might not provide sufficient returns even if you keep your savings intact for a longer period. This is because the interest rate of FDs is usually twice as much as the interest rate offered by savings accounts.
However, the recent decline in the bank FD rates has put forward a new confusion among the investors as to whether the FDs are still as good as before. These are some factors that help you to compare these two investment options:
Interest rates
Fixed deposits offer a much higher FD interest rate than savings account. The interest generated is also much higher as FDs compound your interest after every quarter that a savings account doesn’t.
If you want to earn better interest gains then you can deposit in a high-paying FD like Bajaj Finance FD that offers FD rates up to 6.85%.
By investing in its senior citizen deposit scheme you will get a 0.25% additional FD rate. Non-seniors can invest online by using an online FD form to get an extra FD rate of 0.10%.
Flexible tenor
Savings account enables you to keep your deposits intact for as much as you want but you will have to maintain a minimum account balance. FDs provide more flexibility when it comes to tenor as they come with a broad tenor range.
For example, Bajaj Finance FD allows you to pick a tenor between 12 and 60 months and you can start investing in a fixed deposit plan with a minimum amount of Rs. 25000.
The option of dividing the corpus and investing it in multiple FD schemes and types is also available. This facility enables you to ladder your FDs smartly to meet your fund requirements in the future.
Liquidity options
You can withdraw as much amount as you need from the savings account while maintaining the required minimum balance. You will not get the option of availing a loan against your savings account whereas some financiers like Bajaj Finance are offering an easy loan against FD.
To calculate the maturity value precisely, you can use an FD calculator India that is available on the portal of banks and NBFCs. Also, the lenient withdrawal policies of FDs allow you to liquidate your investment whenever required. To be eligible to receive this benefit, your deposits need to complete at least 3 months from the date of investment.
Periodic interest payouts
FDs provide the option of choosing between periodic payouts and accumulated earnings by investing in non-cumulative or cumulative FDs respectively. For example, the non-cumulative FD from Bajaj Finance enables you to pick between monthly, quarterly, six-monthly, and yearly interest payout options as per financial needs.
Moreover, it is a safe investment avenue as reputed credit rating organizations such as ICRA and CRISIL have rated it highly for its stability and safety.
Savings accounts and FDs are safe investment options but there is a vast difference between both of them. A savings account might be less restrictive when it comes to the method of investment and tenor but it does not provide the options that an FD provides. For instance, an FD compounds the interest after every quarter whereas no such facility is provided by a savings account. Also, the option of availing the interest payouts periodically is not provided by a savings account.
One of the best FD plans is offered by Bajaj Finance as it multiplies your invested amount at a faster rate, provides convenient withdrawal features, and is also a safe option as it has received high ratings for being a stable instrument by credit rating organizations like CRISIL and ICRA.
Author Bio:Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.