Benefits of Fixed Deposits


A good investment plan should consist a mix of safe and risk investments. Fixed Deposit is one such safest investment platforms, where you can invest a big sum of fixed money for a fixed period. The tenure can vary from a few days to several years. The banks provide interest rates depending on the money invested and the tenure of deposit.

The risky investments consists of mutual funds and stocks, whereas fixed deposits, debt instruments, government bonds are ideal risk-free investment plans. Following are a few benefits of fixed deposits.

  1. Fixed deposits from reputed banks are a very safe investment because, since these financial institutions are carefully regulated by the Reserve Bank of India, RBI, the banking regulator in India.

  2. Through fixed deposits, you can also receive regular income through the interest payments that are made every month or quarter. This option is quite useful for retired people.

  3. Investment in fixed deposits upto a maximum of Rs. One lakh for 5 years are eligible for tax deductions under Section 80 C of income tax act. Thus fixed deposits saves tax and also gives high returns on your investment.

  4. The returns of fixed deposits depends on the maturity with deposits having longer tenures earning higher interest rates. So it is advisable to keep your fixed deposit for a longer period of time.

  5. You can even pledge your fixed deposit and get loans at reduced rate of interests. Banks and other financial institutions trusts people who have a strong investment base when considering for a loan or any such money related issues.

Though the returns from fixed deposits might seem low when compared to that of mutual funds or stocks, it is advisable to invest in fixed deposit since your capital investment will always be safe even during inflation, which is not the same in case of risky investments.


Hi MKumar,

Here are the benefits of Fixed Deposits.

 A Fixed Deposit is the safest form of investment as you get guaranteed returns once the tenure is over. For example, one can invest in stock market or real estate but there is a risk of losing money in case the stock market crashes or there is a depreciation in property value. In the case of Fixed Deposits, the risk is minimal as one will get sure shot returns. That is, the principal amount deposited plus interest on a monthly, quarterly or annual basis.
 A Fixed Deposit yields higher interest rates compared to a normal savings account. Since you are depositing your savings for a fixed period of time, banks offer higher interest rates on Fixed Deposits.
 When you face a cash crunch, Fixed Deposits can come to your rescue. Instead of applying for a Personal Loan to deal with the financial emergencies, you can opt for a loan against your Fixed Deposit. This facility grants you a loan of up to 90% of the Fixed Deposit amount. What’s more, the interest rate on a loan against a fixed deposit is lower compared to Personal Loans!
 One of the advantages of FDs is its flexibility. You can deposit any amount of your choice for a tenure ranging from 7 days to 10 years. This helps you plan your savings for the future. Unlike real estate, where you need to invest heavily, you can start investing in a Fixed Deposit with an amount as low as Rs. 1,000. And when in urgent need of money, you can even break the FD and withdraw money before maturity.
 A Fixed Deposit helps cultivate the habit of saving. In order to enjoy the full benefits of the savings scheme, the deposited amount must not be withdrawn before it attains maturity.

Looking for Fixed Deposit? Click here.

BB Expert


Loan against Fixed Deposit helps you fulfil your urgent financial needs without breaking the FD.

a) The Bank sanctions a percent value based on your FD.

b) Interest is charged only on the utilised amount & its tenure.

c) No charges on prepayments

Yes, you continue to earn interest on your existing FD