Fixed Deposit (FD) is undoubtedly the safest investment schemes available in the Indian banking sector. Here are few points that justifies why Fixed Deposit is the best saving schemes in India. Some of the best features of this investment scheme (Fixed deposit) are as given below:-

  1. No link with the Stock Market: The investment is not linked with the stock market and thus, investors are likely not to have sleepless nights keeping an eye on market conditions. They can simply invest and come back when the investment matures to claim the entire maturity sum.

  1. Availability of Tax Benefits: Investment in FD makes investors eligible for tax benefits which can be as high as Rs 1.5 lakhs per year under section 80C of Income Tax act.

  1. Accepted as Collateral for Loan: Lastly, FDs are accepted as collateral for a loan against FD.

Having said all these, there’s one thing which every investor must know: premature withdrawal is a big NO. Premature withdrawal of a Fixed Deposit attracts significant penalty charges on the interest part. Not just that, the investment fails to garner the promised value as ROI owing to untimely withdrawal.


What Happens when Someone Applies for Premature Withdrawal?

When someone holding an FD account with a bank or NBFC applies for premature withdrawal, the respective financial institution lowers down interest rate based on tenor for which the FD was invested. Later on, the applicable interest is calculated as per the new rates and the receivable interest decreases.

Therefore it is extremely crucial for people planning to invest in Fixed Deposit to plan their investment beforehand and avoid the chances of premature withdrawal. You can choose FD