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With its feature of guaranteeing assured returns, the traditional investment of fixed deposits has become a vital part of every investor’s portfolio. However, FDs, that were once considered as a plain vanilla product has now changed its identity by becoming more flexible along with several other benefits attached to them. Today, the banks are facing the era of completion. As a result, more and more attractive deals are coming up in the market in order to attract more investors. Listed below are some of these benefits of Fixed Deposits that one can enjoy. • Insurance - Most of the reputed banks and financial institutions in the country are offering insurance facilities along with FDs. The insurance will be highly dependent on the deposit amount and the tenure of the deposit. For example, if one bank is offering free accident cover worth 4 lakh on a 6 year deposit of Rs 30000 carrying an annual interest rate of 8. In all, this helps in adding a value to the product. • Floating interest rates and reinvestment - Most of the times, fixed deposits are offered at fixed rates for a specific tenure. However, some banking and non-banking financial companies are offering schemes at floating interest rates. For instance, a company might offer floating rate deposits where interest rates are given in the beginning of every quarter. Not just that, some banks are facilitating investors by allowing them to reinvest their interest amounts at the existing rates. For example, you get interest of Rs 3000 every quarter; the bank will now make a new FD with this amount at the already existing interest rates. • No penalties - FD are known for being fixed in their tenure. It’s only after its due date, after which the deposit holder is allowed to withdraw the money. In case, a person withdraws money before maturity, he/she is penalized. In such a case, the overall returns will decrease. To stop this, some banks are providing with fixed deposits where the interest rates are not reduced if the FD is broken before the tenure. For investors who seek for flexibility, such deposits can prove to be beneficial. • Breakable deposits - Usually, opening up multiple fixed deposits of smaller denomination involves a large amount of paperwork. In cases where the investor requires money at various stages in future, might opt for an investment where there is more flexibility. This way, she/he does not require to deposit in bulk and then break the deposit. Hence, banks are solving this problem by introducing products where a bulk deposit is divided into deposits that are much smaller. This helps catering the investor’s needs and requirements. • Flexible Tenures - At times of emergencies, there comes a need for extending the tenure of an FD. In such cases, some of the banks have provided with the facility where an investors is allowed to increase the time period of the investment without making a major changes in other conditions. Such are the trendy benefits of fixed deposits in the market today.
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