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How many types of Fixed Deposits Exists?

Bank Savings

How many types of Fixed Deposits Exists?


A fixed deposit is a scheme in which you deposit money for a fixed period, known as tenure. Unlike a regular savings deposit, you can not withdraw cash from an FD under normal conditions. However, an FD has a much higher interest rate than a standard savings account. This makes FDs a popular investment choice for many people as they prefer its security over riskier asset classes such as equities and real estate.

Types of Fixed Deposits

There are many types of fixed deposits; however, all FDs fall into one of two categories based on the mode of payout you opt for:

Cumulative FD – In a cumulative FD, you only withdraw your interest at the end of the term. Till then, the interest keeps getting compounded.

Non-cumulative FD – In a non-cumulative FD, you can withdraw the payout at regular intervals, either quarterly, 6-monthly or annually. The interest rate is usually a little less than in the case of cumulative FD.

With these two distinctions in mind, we now look at the various types of FD:

1. Standard FD – This is the most common type of term deposit. It is available in most banks. The tenure can vary from 7 days to 10 years.

2. Tax-saving FD – This type is geared towards investors prioritizing tax savings rather than growing their principal amount. Its features are:

  • Tax exemption of up to Rs. 1.5 Lakhs a year.
  • A minimum lock-in period of 5 years.
  • Investments are allowed only through a one-time lump sum.

3. Senior Citizen FD – This type of FD is only for those aged 60 years or above. Their main features are:

  • The interest rate is often a few base points higher on this FD than on other FDs.
  • Tenure is more flexible as compared to other types of FD.

4. Flexi FD – This particular type of FD linked to your savings account offers the investor a great deal of flexibility. Its features are:

  • Flexible tenure
  • Facility for premature withdrawal

5. Corporate FDs – Non-banking financial companies (NBFCs) usually offer these types. They offer competitive interest rates and varying options for the tenure of the FD.

6. Fixed Deposits for NRIs– Several types of term deposits for non-resident Indians (NRIs) offer various features specially tailored to the needs of those whose earnings are primarily in foreign currency. Two common types of FDs for NRIs are:

  1. NRE FD – Non-resident External FDs are suited for those NRIs who earn in foreign currency and wish to invest in an Indian bank account. The interest on NRE FDs is tax-free. However, they are subject to exchange rate fluctuations.
  2. NRO FD – Non-resident Ordinary FDs are meant for those NRIs who wish to invest their savings in Indian rupees in India. NRO accounts are taxed at 30%.

As you can see, different FDs have various features and even offer different interest rates and tax benefits. If you are interested in an FD, check for the best interest rates on Finserv MARKETS.

Eula Boone

I have written professionally since 2010 and have been an investor since 2015. My finance blog, economydiva.com, is one of the most visited blogs in the world, with more than 3 million readers a month. I love sharing what I know about investing, saving, and managing money and providing practical tips on how to be a smart and savvy money manager.