Term Deposits are an excellent option for investors who want to lock in their funds for a set period of time and earn interest at the same time. It’s important to understand how they work and if they’re a good fit for your financial plan before you decide to invest in one.
What is the difference between term deposit and fixed deposit?
Generally, judo bank term deposits offer higher rates of interest than savings accounts and online or call accounts. However, they can be difficult to withdraw from without paying a penalty. In addition, term deposits typically don’t pay enough to keep up with inflation.
A recurring deposit is another type of term deposit that pays a fixed interest rate at a specified time every year. This is often an ideal option for people who are saving to buy a home or for any other major investment.
The bank usually reinvests the interest earned on the deposit. In some cases, the accumulated interest is paid out at the end of the investment tenure as a lump sum.
There are many benefits to investing in a bank term deposit, including the fact that they often offer insurance on your funds. Per RBI regulations, banks are required to insure deposits up to INR 500,000.
Term deposit accounts are also a popular way for seniors to save money as they offer a slightly higher interest rate than savings or online savings accounts. In addition, they are insured by the FDIC and NCUA. Lastly, they may be easier to access than savings accounts in the event of an emergency.