Fixed Deposits, better known by their acronym FD, are an excellent way to preserve one’s savings. An FD offers a uniform interest flow through FD interest, an interest rate that could be a lot more reliable than equity investments or mutual funds. In India, FDs are one of the most popular ways to save money as these fixed deposits offer good returns, are easy to open and are a safe investment.
In an FD, what happens is that an individual puts a lump sum of money in their bank account at a particular bank for a fixed tenure at an agreed rate of interest, that is, the HDFC FD interest rate. At the end of the maturity period, that is, the end of the fixed tenure, an individual receives the amount that they had invested alongside compound interest.
Documents required to open an FD
Just like any other bank account or bank deposit, opening a fixed deposit requires paperwork and documentation. Following are the documents required by banks to open an FD:
Features of an HDFC FD
Interest rates on FDs are fixed when you open the deposit and the rate depends on the term that you wish to hold it for. HDFC Bank recently (April 2018) increased the interest rate on its Fixed Deposits of certain tenures by 1%. Visit the HDFC Bank website to view the latest FD interest rates.
A fixed deposit offers guaranteed returns. Unlike market-led investments where returns fluctuate over time, the returns on an FD are fixed when you open the account. Even if interest rates fall after you open a fixed deposit, you will continue to receive the interest decided at the start. FDs are considered much safer than investments in other assets like equity.
Your return on an FD will depend on the interest rate and the type of deposit you choose. You can opt for a monthly or quarterly pay-out of interest or the reinvestment option, which will give you the benefit of compounding. Check the HDFC Bank FD Calculator to calculate your return on investment.
HDFC Bank offers Fixed Deposit in flexible tenures. The tenure could range from anywhere in between seven days to ten years.
While FDs are fixed for an agreed tenure, you can take a loan against it when you need funds. HDFC Bank offers loans against FD in the form of an overdraft, and you can get up to 90% of your FD amount. The benefit is that your FD continues to earn interest, you don’t have to prematurely withdraw your FD, and end up paying a penalty.
The HDFC Fixed Deposit scheme offers FD interest rates within the range of 3.50% p.a. to 7.40% p.a. Senior citizens or individuals above the age of 60 are eligible to receive a rate which is 0.50% higher than the regular rates. The interest income earned on HDFC Bank FD Time Deposit is taxed under Tax Deducted at Source (TDS) as per the Income Tax Act, 1961. Premature withdrawals will be penalized with an interest rate will be 1% less than applicable rate. In case one makes a premature withdrawal within 7 days of creating the account, they will not receive any interest. One can open or close the FD account through net banking or internet banking. The tenure range for HDFC Bank Fixed Deposits is 7 days to 10 years. The depositor can avail the nomination facility.
One can link their savings account or current account to the Term Deposit account. The FD account is easily liquefiable. In case of withdrawals, one must repay the amount at an interest rate which is 2% more than the bank FD rate. The funds remaining in the account would continue to yield interest. The bank allows the depositor to modify the tenure and maturity-related instructions
The Sweep-In facility enables one to transfer funds from the FD account to their linked savings account. The breaking down of the FD is done in units of Re. 1. If the deposit is broken within 7 days of creating the account, the depositor will not receive interest.
This variant of Term Deposit comes with a lock-in period of 5 years. One needs to invest within the range of Rs.100 and Rs.1.5 lakh. A depositor can choose to receive the interest income either on a monthly basis or a quarterly basis. The 5-year tax saving FD scheme comes with a tax benefit as per Section 80C of the Income Tax Act, 1961. One can create a Fixed Deposit account as a joint account. If the FD account is a joint account, only the primary account holder will be eligible for the tax benefits. The interest rate for the Tax Saving FD is 6.50% p.a. for the general public and 7.00% p.a. for senior citizens. The interest income will be subject to taxation under Tax Deducted at Source (TDS) according to the Income Tax Act, 1961.
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