5 Things you should know before investing in the FD

What do you know about What you will know about fixed deposits? FAs we know, fixed deposits are the easier way of investing, but still, there are some things that you must know before investing in fixed deposits. No matter what kind of investments you choose, it is essential to make sure that your capital is protected and that you can earn good returns. 

If it comes to fixed deposits, there are some things that you should consider before investing in the FD. In this article, we are going to tell you about the 5 things that you should know before investing in fixed deposits. 

Interest rates 

As the banks fix their own fixed deposit interest rate, it is essential to compare the rates that are provided by the banks before opening the FD account. For this, you should only trust the reputed bank that provides the competitive rate for the investments. 

FD tenure 

To suit the requirements of the different investors, banks provide the FD for 7 to 10 days. It is suggested to choose the tenure carefully as you will need to remain invested in the account for the selected duration. The interest rate differs based on the FD tenure. 

Minimum account balance 

There is also a need to check the minimum account balance while opening the Fd account. Many banks permit you to open the FD for the minimum balance. If you are going to an FD account for the minor, you must check the minimum account balance. 

In this case, you can also use the FD calculator to determine how much your FD account earns at the end of your tenure. 

Maturity date 

You can easily find the maturity date of FD on the receipt that you gain for opening the FD account. You can easily open your FD account for many purposes, such as gifting to your kids on their birthdays. 

It is suggested to cross-check the maturity date to make sure that the fixed deposit matures at the right time. 

Prematurely withdraw penalty 

The investment in the fixed deposits has come with the early withdrawal facility. This facility helps you to make a partial and complete withdrawal from the fixed deposit account even before the maturity date. 

However, you need to pay the penalty for it. It is suggested also to check the penalty before opening the fixed deposit account. 

Auto-Renewal

Many banks provide the FD auto renewal facility. By using this auto renewal facility, the accrued interest, as well as the principal amount, is re-invested for the chosen duration. If you are opting for this auto renewal facility, then same it will be mentioned in the account opening receipt. 

Conclusion 

It is concluded that fixed deposits are the safest option for investments. Just keep the above things in your mind before investing in fixed deposits. It is suggested to choose the reputed bank to experience the safety and the convenience.