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Here Are Some Startling Truths About FD Returns
Posted on Tuesday, October 12th, 2021 | By IndusInd Bank
Here’s a fact. If you are a beginner and wish to invest your money in the safest way possible, you should open a fixed deposit. FDs are popular because they help in the risk-free growth of your funds. By investing your savings in an FD, you can earn interest and work towards your financial goals, such as planning for education, weddings, or accumulating a corpus for retirement.
Thanks to financial institutions such as IndusInd Bank, you can open and manage an FD account from the comfort of your home. You can create an online FD within minutes, without cumbersome paperwork!
But despite the assurance and simplicity of FDs, there is still a lack of information about the returns they generate. Let’s dig deeper to learn more.
#1 Senior Citizens Can Get a Higher Interest Rate
If you are above 60 years of age, you will get a higher fixed deposit interest rate on your deposits. This feature makes financing your post-retirement life comfortable. You can also set up a regular source of income by choosing a non-cumulative FD to get periodic returns.
#2 You Can Get a Loan Against Your FD
As you know, emergencies can arise at any moment. For example, you might need to arrange funds quickly for a medical emergency or find yourself short on funds while paying for education. In such cases, you do not have to break your FD and liquidate your investments. Instead, you can cover these expenses conveniently by opting for a loan against your fixed deposit.
#3 You Can Use Your FD Investment to Save Taxes
While fixed deposits are taxable, not everyone needs to pay taxes. Returns from FDs fall within your total income under ‘income from other sources.’ For company deposits, TDS is deducted only when the interest exceeds Rs. 5,000 in one financial year. If your taxable income is lower than the taxable amount, you can avoid paying TDS entirely. In that case, you need to submit form 15G or form 15H.
#4 Only the First Account Holder Needs to Pay TDS for Joint FDs
Did you know you can choose to open a bank FD jointly with your spouse, sibling or parent? However, when you open a FD jointly, only the first account holder will have to pay TDS over the returns. So if your parents are senior citizens and you open an FD in their name, you will not have to pay any taxes on the returns.
#5 A Cumulative FD Will Yield Greater Returns on Maturity
FDs provide you with two options. You can either receive the fixed deposit interest rate payouts at regular intervals or obtain the whole amount (principal amount and bank interest) on maturity. The latter can fetch you more returns because of compounding. Essentially, in a cumulative deposit, the interest paid by the bank is compounded or multiplied at regular frequencies. So, the higher the frequency of compounding, the higher the yield on your principal amount.
To Sum Up
FDs are fruitful in the long term because they offer steady and assured returns. Now that you know the facts about FD returns, it is time that you create a deposit for your savings. If you want to open a fixed deposit in a bank that offers an attractive rate of interest, choose IndusInd Bank. You can instantly open a fixed deposit online with IndusInd Bank and enjoy a number of benefits such as flexible tenure, flexible options for interest payment and auto-renewal option. To find out more about the FD offered, visit us.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
