FIXED DEPOSIT

Fixed Deposit (FD) is a type of bank deposit where you keep a fixed amount of money with a bank for a fixed period and earn interest on it.

Simple Meaning

Fixed Deposit = Money kept in a bank for a fixed time to earn interest.

Example

Suppose you deposit ₹50,000 in an FD for 2 years at an interest rate of 7% per year.

Principal: ₹50,000

Tenure: 2 years

Interest rate: 7% p.a.

At maturity, you receive your original amount + interest.

Important FD Terms

Term Meaning

Principal Money you initially deposit

Interest Rate Percentage paid by the bank

Tenure How long the money stays deposited

Maturity Date Date when the FD period ends

Maturity Amount Principal + interest received at maturity

Premature Withdrawal Taking money out before the FD matures

Renewal Continuing the FD after maturity

Cumulative FD Interest is added and paid at maturity

Non-Cumulative FD Interest is paid periodically

TDS Tax deducted from interest when applicable

FD vs Savings Account

Savings Account: Money is easily available and you can withdraw whenever needed.

Fixed Deposit: Money is deposited for a fixed period and generally earns a higher interest rate, but early withdrawal may involve a penalty or reduced interest.

In short:

FD is a safe savings/investment option where you deposit money for a fixed period and earn predetermined interest.