Fixed Deposits: What Are The Different Types Available?

Fixed Deposits: What Are The Different Types Available?

May 14, 2024 Off By Glespynorson

If you want an investment option that offers good returns, is safe, and is easy to open, a Fixed Deposit can be an excellent option. FDs are one of the most popular methods of saving money in India. They are also one of the safest investment instruments available in the market. Besides, there is more than one type of FD to explore.

What is an FD?

An FD is an investment option banks offer. When you opt for this instrument, you need to deposit a lump sum for a pre-determined period. This usually ranges between seven days to five years and above. Consequently, you earn an interest on the amount you deposit. This interest rate usually varies based on the bank you choose. It also depends on the term of your FD. However, the interest rate is generally more than what a Regular Savings Account offers.

Once the tenure of your FD ends, you receive the principal amount you had invested, along with the compound interest.

Benefits of FDs

When you open a Fixed Deposit Account, you could enjoy the following advantages:

  • You can select from various tenures depending on your financial needs.
  • The interest rate on your FD is fixed when you open this Term Deposit. This rate does change throughout the tenure of the FD. Hence, FDs offer assured returns. Since FD interest rates vary across banks, compare, and look for higher FD rates when opening your deposit.
  • Most FDs can easily be liquidated before their maturity date. While you may have to pay a penalty, it allows you to access your funds during an emergency.

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Types of FDs

Opening an FD is easy. You can easily open one using your Banking app facility. When opening the FD, you can consider its various types:

  • Cumulative FDs

When you opt for a Cumulative FD, the interest you earn on the deposited amount is paid to you at maturity. This scheme allows you to enjoy the benefit of earning interest on both the principal amount as well as the interest.

  • Non-Cumulative FDs

When opting for an online Fixed Deposit, you can also open a Non-Cumulative FD.  Here, the interest does not accumulate. Instead, it is paid to you at regular intervals. You can choose this FD when you want to receive regular income paid to you on an annual, half-yearly, monthly, or quarterly basis.

  • Senior Citizen FDs

The FD interest rates are typically higher for senior citizens than those offered to regular citizens.

  • Tax-Saving FDs

You can also use Mobile or Net Banking to open a Tax-Saving FD. This FD lets you claim tax deductions u/s 80C of the Income Tax Act. However, this FD has a five-year lock-in period, and you cannot withdraw it prematurely.


Now that you know the various types, you can easily select a suitable one when opening an FD.