Benefits of fixed deposit
Fixed deposits are a popular investment option because of their low-risk nature. Unlike other investment options, FDs provide guaranteed returns regardless of market fluctuations. Additionally, FDs can be used as collateral for loans or other financial instruments, making them a versatile investment option. If you have opened a Bajaj Finance Fixed Deposit, you can also get a loan against your FD during any emergency.
Also read: What is fixed deposit
What is Time Deposit?
Time deposits or term deposits are investment options offered by financial institutions. In a term deposit account, a fixed amount of money is invested for a fixed term at a fixed interest rate. The interest rate on term deposits generally varies, depending on the financial institution. Term deposits are also known as certificates of deposits or recurring deposits. In this, customers can examine the terms of a term deposit on paper statements. The statement covers the required minimum principal amount, the rate of interest paid, and the period to maturity of the deposit, as agreed upon by the depositor and the bank at the outset.
Benefits of Time Deposit
The biggest advantage of a time deposit is that it is a low-risk investment option. Additionally, time deposits provide good returns over the investment period. The lock-in period for a time deposit can range from one month to five years, depending on the financial institution. Investors can choose the lock-in period that best suits their investment goals and risk appetite.
Time Deposit vs Fixed Deposit
Both term deposits and fixed deposits offer fixed interest rates that help provide stable and predictable returns. They also come with competitive rates and flexible tenure options, allowing investors to choose plans based on their financial goals and time horizon.
Term deposits may sometimes include variable maturity structures and comparatively lower interest rates depending on market conditions. In contrast, ICICI Bank Fixed Deposits generally offer relatively higher fixed interest rates with defined tenures and structured payout options.
| Features | Term deposit | Fixed deposit |
|---|
| Interest rates | May have fixed or variable rates depending on market conditions | Fixed interest rate throughout the tenure |
| Deposit tenure | Depends on the type of deposit selected | 7 days to 10 years with ICICI Bank |
| Charges on premature withdrawal | Yes | Yes |
| Flexibility | Generally more flexible compared to traditional FDs | Offers similar flexibility with structured terms |
| Returns | May offer relatively lower returns | May provide comparatively higher returns |
| Renewability | Usually cannot be renewed | Can be renewed at maturity |
| Investor suitability | Suitable for short term investors | Suitable for both short and long term investors |
