While fixed deposits are one of the simplest investments, there are a couple of things that one should be aware of before opening an FD account. Read this post to understand the essential things you should know before putting your money in FD.

No matter what type of investments you choose, it is essential to get as much information about them as possible to ensure that your capital stays protected, and you earn maximum returns. While FDs are not as complicated as other investment instruments, there are several things that an investor should understand before opening a fixed deposit. The following are the essential things to know before investing in FD:

Interest rate

As banks have their interest rates on fixed deposits, it is crucial to evaluate the rates offered by various banks before opening an FD account. Only invest in a reputed bank that gives you a competitive rate of investment.

Maturity date

You can also know the FD maturity date on the acknowledgement you receive for opening an FD account. If you are opening an FD account, for example, as a gift to your child on their birthday, verify the maturity date to ensure that the FD matures at the right time.

Auto-renewal

Most banks also provide bank FD auto renewal facility. With this facility, your principal amount and the accumulated interest gets re-invested for a duration of your choice. If you have chosen this facility, the same will be mentioned on the acknowledgement receipt.

Nomination

When you open an FD account, you will need to select a nominee. In case of your demise during the FD tenure, your nominee will be given the FD amount. The details of the chosen nominee are also mentioned on the account opening acknowledgement receipt.

Interest rate for senior citizens

Senior citizens are given a slightly higher fixed deposit interest rates as compared to regular investors. If you are a senior citizen or keen to open an FD for your senior family members, ensure that you verify what rate the bank offers on a bank fixed deposit for senior citizens.

Minimum account balance

You should also verify the minimum amount that you require for opening an FD account. Most of the top banks let you open bank FD for as little as INR 10,000. If you are opening an FD account for a minor, the minimum balance usually is INR 2,000. You can take the help of a fixed deposit calculator to understand how much your FD amount can earn at the end of the duration.

TDS Declaration

The bank will deduct Tax Deducted at Source (TDS) if your FD interest income accrued is more than INR 10,000 in a year. However, if you come under the no income tax bracket, you will have to give Form 15H or 15G to declare the same.

You can operate your fixed deposits through net banking apps as well nowadays. You can do so from the convenience of your home.