Fixed Deposit Account

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Fixed Deposit Account also know as a Fixed Deposit primarily means that the amount deposited is fixed for a period of time and cannot be withdrawn prior to the agreed term.

Fixed deposits are considered a safe investment and a source of income as these deposits provide periodic interest pay out at the agreed rate when the fixed deposit was placed.

Unlike other accounts, fixed deposit account does not have charges for non maintenance of required balances as this account is opened when a person intends to deposit his savings for a fixed period of time at an agreed interest rate, when the fixed deposit matures or is uplifted prematurely, the account gets closed automatically. Interest rate offered by Banks may vary from time to time as Banks generally offer higher rate of interest when the Bank is in need of cash flow and provide low rate of interest when the Bank has surplus funds at its disbursal.

If a person intends to withdraw or break the fixed deposit before the completion of the period, an upliftment charge which is generally 2% is levied on the deposit amount. This does not mean that the Bank will deduct 2% from the actual amount deposited but means that what interest was being paid by the Bank for the period Fixed deposit was placed this upliftment charge is levied on the interest earned. In simple words, at the time of placing the deposit, what ever was the interest rate applicable from the date fixed deposit was placed till it is uplifted, 2% will be deducted from that interest rate and the remaining amount paid out to customers.

Fixed deposits were considered as save investment some years ago by our grand fathers or great grand fathers as they used to think that investing money anywhere else is a risk and the safest investment used to be a fixed deposit and they used to earn interest on the amount deposit and used to control their expenses as per their income; this is highly improbable in today world and hence the young generation prefers to keep the amount invested in equities or bonds or debentures.