Advantages of fd bank (fixed deposit) beyond the interest rate


Amid falling interest rates on bank term deposits (FDs), investors with low risk appetites are advised to consider the other benefits of bank FD before moving on to another option. During the spread of the Covid-19 pandemic, banks have innovated certain banking FDs where the investor is eligible for insurance for health care benefits. Thus, investors should consider the benefits of bank FD beyond interest rates.

Speaking on FD banking investments, Praveen Kutty, Head of Retail Banking at DCB Bank, said: “We have seen that the growth of bank term deposits has remained healthy despite interest rates. They have been a reliable investment avenue for investors with a low appetite for risk. During the pandemic, many affluent customers had no options to spend. These accumulated funds were preferred to be stored as term deposits, as other asset classes gave unstable returns. Another reason is the stock markets. Many investors are turning to term deposits. (FD) for diversification as markets are at their all-time high. “

Favoring the FD bank for the diversification of its portfolio, Jitendra Solanki, tax and investment expert registered with SEBI, declared: “The FD bank offers a guaranteed return to the investor, so you have to have the FD bank in your portfolio. . have been witnessing over the past few and a half months. “Solanki said that the easy overdraft tax advantages are other advantages that go beyond the bank FD interest rate. Thus, it is also worth considering these additional benefits when investing in FD bank.

When asked about the advantages of FD bank beyond the interest rate, the two experts listed the following:

1]Tax advantage: Under Section 80C of the Income Tax Act, Indian banks offer tax exemption on FD long-term bank returns. These tax-free bank FDs have a duration of 5 years or more.

2]Ease of overdraft: FD bank can also be used as a means of fundraising. Banks offer overdraft facility against FD bank.

3]Value-added benefits: There are fixed deposits, which come with free life insurance without any medical examination in which the coverage is equal to the FD amount (this is subject to a time and age limit and the maximum insured amount). On the other hand, another FD option allows you to opt for a free medical consultation on a virtual platform, both reassuring and safe. These benefits are mainly available in value-added bank FDs.

4]Guaranteed return: FD Bank’s interest rate does not fluctuate like small savings plans. Thus, the FD bank is an investment instrument that offers a guaranteed return to the investor.

5]Ease of investment: In the age of digital India, an investor does not need to sit on hold for hours to open an FD bank account or deposit money in their FD bank. One can do these things by using the net banking facility. Thus, FD bank also offers an investment facility to investors.

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