How Does a Fixed Deposit Work?

How do Fixed Deposits work in India?

When working hard to multiply your earnings, consider making strategic investment decisions that let your money work for you. While this can be a smart way to grow savings, it is essential to know that there is some level of risk in most investment options.

IF you’re looking to avoid risks and grow your savings with assured returns, Fixed Deposit can be an excellent investment avenue for you. They can be used to hedge against inflation and lock away money for your future.


How does Fixed Deposit work?


When investing in fixed deposits, you lock away your funds for a fixed period, and the principal sum deposited helps you earn interest on a cumulative basis. This means that after every specific time interval, the interest earned on your fixed deposits gets added to your principal amount, which results in incremental growth of interest earned after every specific interval. Hence, all you need to do is watch your investments grow over time, and you can sit back and multiply your savings.

Types of Fixed Deposit


Fixed Deposits are offered by banks, NBFCs (or companies) and post-offices. For those looking for higher returns, it is better to invest in company FDs like Bajaj Finance, where you can look for a blend of safety and attractive returns. When choosing the type of deposit, you have the options of cumulative or non-cumulative deposit.

Cumulative Fixed Deposit

Cumulative Fixed Deposit helps you get your returns at maturity, and is best suited for individuals who intend to set aside savings to fund their goals. Due to the effect of compounding, returns on cumulative deposit is higher than non-cumulative deposit.

Non-cumulative Fixed Deposit

Non-cumulative Fixed Deposit enables you to get returns on a periodic basis, and is best for those looking to generate regular income through their savings. Thus, most senior citizens opt for non-cumulative deposits, as these help them get returns on a periodic basis, thereby helping them fund their regular expenses.

Bajaj Finance FD offers the option of both cumulative and non-cumulative deposits, with option to choose payouts on a monthly, quarterly, half-yearly and annual basis.

Systematic Deposit Plan

Systematic Deposit Plan by Bajaj Finance is best for individuals looking to start saving with amounts as small as Rs. 5000 per month. With this, they can choose to make several deposits and get returns on a monthly basis with Monthly Maturity Scheme variant, or raise a lumpsum amount and get all maturity proceeds on a single day with Single Maturity Scheme variant.

Bajaj Finance NRI Fixed Deposit is also a great way for NRIs with an NRO account to start growing their savings easily.

Additional Read: Types of Fixed Deposit

Benefits of investing in a Bajaj Finance FD

With Bajaj Finance Fixed Deposit, you can unlock a suite of exciting features and benefits, some of which are listed below:

  • Safety and security of your funds with top stability ratings from CRISIL and ICRA
  • Higher interest rate for senior citizens, to help them grow their savings faster
  • Greater interest rate on renewal of your existing fixed deposits, which helps you accumulate all the higher returns you’ve earned and grow them more at a cumulative pace
  • Flexible tenor, which helps you ladder your savings and manage multiple fixed deposits diversified across different tenor
  • Flexibility to choose periodic interest payouts, so you can manage your regular expenses easily

Bajaj Finance online FD is a great way to start your investment journey, from the comfort of your home. In addition to the convenience, Bajaj Finance also offers additional 0.10% returns on making an online investment, to individuals who are below 60 years of age. Senior citizens get additional rate benefit of 0.25%, regardless of their mode of investment.

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