By Niveshkarlo
July 21, 2026
A Fixed Deposit (FD) is a low-risk investment offered by banks and NBFCs where you invest a lump sum for a fixed tenure at a predetermined interest rate. Unlike a savings account, the interest remains fixed throughout the deposit period, making returns predictable.
– Deposit a lump sum. – Select a tenure (typically 7 days to 10 years, depending on the institution). – Lock in the applicable interest rate. – Receive your principal plus interest at maturity, or choose periodic interest payouts if available.
– Guaranteed returns – Capital protection – Flexible investment tenures – Higher interest than most savings accounts – Option for monthly, quarterly, or cumul
– Regular FD – Standard investment for a fixed tenure. – Tax-Saving FD – Eligible for tax deduction under applicable tax laws, with a 5-year lock-in. – Senior Citizen FD – Often offers higher interest rates for eligible senior citizens. – Cumulative FD – Interest is reinvested and paid at maturity. – Non-Cumulative FD – Interest is paid monthly, quarterly, half-yearly, or annually.
Before opening an FD: – Compare interest rates across banks. – Check premature withdrawal penalties. – Understand the taxation of interest income. – Verify deposit insurance coverage and the institution's credibility. – Choose a tenure that matches your financial goal.
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