When choosing an investment, the fixed deposit minimum period is vital as we evaluate assets based on their timeframe. Fixed deposits are often favoured due to their stability against market fluctuations.
However, before finalising your decision, it's crucial to assess your investment criteria and determine the most suitable type of FD for your needs.
This blog explores the various types of Fixed Deposits available in India and discusses their differing investment terms.
Different types of fixed deposits
- Standard fixed deposit: Kotak811 offers standard fixed deposits to clients. An investor in a regular fixed deposit must commit to investing his money at a predefined interest rate for a set amount of time. The typical term of a fixed deposit is seven days to ten years. Investors most often select this option.
- Special fixed deposits: At Kotak811, you can typically issue an FD for a specific time. This is why they are called "special." Anything can be considered an exceptional time, such as 290 or 390 days. Special FDs are a well-liked option for various investors, as they provide a greater interest rate.
- Tax saving fixed deposit: Unlike regular fixed deposits, tax-saving fixed deposits at Kotak811 are only available for bookings that span 5 years or less. Section 80C exempts the amount invested from taxation, but the interest earned by the FD is subject to taxation.
- Floating fixed deposit: Not all Indian banks allow customers to choose a variable fixed deposit interest rate. At Kotak811, the interest rate is subject to quarterly or annual variations, and investors can benefit from these fluctuations.
Minimum period for an FD
One of the best ways to save for the future is with a fixed deposit. A fixed deposit at Kotak811 can be scheduled for a minimum of seven days and a maximum of ten years. In addition, you can choose to have your Fixed Deposit automatically renewed, allowing you to keep investing for as long as you like.
A term or fixed deposit at Kotak811 can be scheduled by following these easy steps:
Using mobile banking:
- Select Fixed/Recurring Deposits under Banking.
- Accessible Fixed Deposit
Through net banking:
- First, select Investment -> Deposits.
- Make a one-time or ongoing deposit.
What is a premature withdrawal?
A premature withdrawal from a fixed deposit (FD) refers to withdrawing money from an FD account before the agreed maturity date. This can be a common financial move when the depositor needs urgent access to cash, but it often comes with penalties because the bank misses the anticipated period for which the money was to be invested.
Fixed deposits, known for their security and stable returns, are designed to be held until maturity to provide a pre-declared interest rate. At Kotak811, the duration of an FD can range from as short as 7 days to as long as 10 years, with the interest being paid out at monthly, quarterly, or annual intervals. Interest rates may vary based on tenure and amount, and senior citizens often receive higher rates.
If a depositor opts for premature withdrawal, most banks will impose a penalty, which typically reduces the interest rate by 0.50% to 1.00%. Kotak811 offers penalty-free withdrawals within seven days of booking an FD but charges a penalty of 0.50% on the interest rate for withdrawals from FDs invested for 181 days or more.
Premature withdrawal applies to most types of FDs except certain special accounts like tax-saver FDs, where withdrawals are not allowed before the completion of the fixed term. Therefore, while FDs are an excellent investment vehicle for risk-free returns, investors should be cautious about premature withdrawals unless necessary to avoid financial losses in the form of penalties.
Benefits of fixed deposits
Fixed Deposits from Kotak811 offer numerous advantages, making them a preferred choice for investors seeking safety and stability. Here are some of the key benefits:
- Assured returns: Fixed Deposits provide a guaranteed return on investment, offering peace of mind to investors.
- Overdraft facility: Depending on the tenure of the Fixed Deposit, investors may have the option of an Overdraft facility, which allows them to borrow against their Fixed Deposit.
- Flexible tenure options: Fixed Deposits have flexible tenure options, catering to investors' diverse needs and preferences.
- Hassle-free online application: Opening a Fixed Deposit account is quick and easy, with many banks offering hassle-free online application processes.
- High liquidity: Fixed Deposits are designed to be held for a specific tenure. Investors can withdraw their funds prematurely, albeit with applicable penalties and subject to terms and conditions. This provides high liquidity, allowing investors to access their funds when needed.
Fixed deposit eligibility criteria
At Kotak811, a fixed deposit account is open to a wide range of individuals, ensuring flexibility and accessibility for all. Here's who is eligible to open a Fixed Deposit account with the correct fixed deposit documents required:
- Indian nationals: Any Indian citizen residing in India can open a Fixed Deposit account with Kotak811.
- Non-resident Indians (NRIs): NRIs can also take advantage of the Fixed Deposits offered by Kotak811, which make it convenient for them to invest and grow their savings.
- Senior citizens: Senior citizens, who often seek secure investment options, are eligible to open Fixed Deposit accounts with Kotak811, providing them with assured returns and financial stability.
- Hindu undivided families (HUF): Members of Hindu Undivided Families can invest in Fixed Deposits with Kotak811, allowing them to manage family finances and secure their savings collectively.
- Minors: Minors can open Fixed-Deposit accounts under the guardianship of their parents or legal guardians, enabling them to start saving and investing at a young age.
Conclusion
Kotak811’s fixed deposits offer a secure and flexible investment option for individuals seeking stability and assured returns. With various fixed deposits available, investors can choose the option that best suits their financial goals and investing method.
Avail higher fixed deposit rates at 7.40% per annum for a tenure of 12 months, 25 days to less than 23 months, providing an attractive option for medium-term investments.
While considering the fixed deposit minimum period and potential premature withdrawals, weighing the benefits and risks associated with each type of fixed deposit is essential. With hassle-free online application processes at Kotak811 and eligibility open, fixed deposits remain a popular choice for investors looking to safeguard and grow their savings.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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