Frequently Asked Questions
Types of Term Deposit
Term Deposits include Recurring Deposits and Fixed Deposits, both requiring money to be locked in for a set period.
Synopsis:
- Recurring Deposits involve regular, fixed investments over time, with penalties for early withdrawal and interest rates of 7% to 9%.
- Fixed Deposits offer flexible durations from 7 days to 10 years, with interest rates ranging from 4% to 7.5%.
- Interest Rates on fixed Deposits generally provide higher interest rates than Recurring Deposits.
Overview
Term Deposits can be a suitable choice for those seeking a stable and secure investment return. With Term Deposits, your money is invested for a fixed period, and you cannot typically withdraw it until maturity. That is why they are called Term Deposits, as the funds are locked in for a specific term. Here’s what you should know about Term Deposits. There are two types of Term Deposits: Recurring and Fixed Deposits.
What are Recurring Deposits?
In a Recurring Deposit, a fixed sum of money is invested at a fixed interval. In most cases, this interval is once a month. The investments earn interest on them till the maturity period.
Once the sum of money and the tenure of the Recurring Deposit are fixed, they cannot be changed. Premature withdrawal is possible, but there will be a penalty on the interest rate that the bank gives.
The minimum Recurring Deposit amount is ₹1,000 and can be increased in multiples of ₹100. The minimum investment period for a Recurring Deposit is 6 months, and the maximum is 10 years. The interest rate on Recurring Deposits ranges between 7% to 9%.
Some banks allow you to convert a Recurring Deposit to a Fixed Deposit on maturity.
What are Fixed Deposits?
Fixed Deposits are deposits where a particular sum of money is invested for a fixed duration. The duration of Fixed Deposits is flexible. It can range from 7 days to 10 years. The interest rate for the Fixed Deposit depends on the lock-in period.
Like a Recurring Deposit, you cannot withdraw a Fixed Deposit amount until maturity. Premature withdrawal is allowed after the bank charges a penalty on the interest rate. The minimum amount of investment for a Fixed Deposit is ₹5,000. The interest rate on the Fixed Deposit ranges from 4% to 7.5%. You can also calculate your interest rate using the FD calculator.
Some banks provide the option of a sweep-out facility where the amount above a particular balance in a Savings Account is automatically converted to a Fixed Deposit. This helps the Savings Account earn more interest.
Final Note
You can create your Fixed or Recurring Deposit Asset through an HDFC Bank Savings Account. New customers create an FD/RD by opening a new Savings Account; existing HDFC Bank customers can create their Fixed Deposit / Recurring Deposit by clicking here.
Looking to open a Term Deposit? Click here to get your Fixed Deposit asset today.
*Disclaimer: Terms and Conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.The choice depends on your financial situation. A Fixed Deposit is better suited for investing a lump sum amount, while a Recurring Deposit is ideal for those who want to invest small amounts regularly and build savings over time.
Term Deposits are considered relatively safe as they offer assured returns and are not directly affected by market fluctuations.
Interest on Fixed Deposits is calculated based on the principal amount, tenure, and applicable interest rate, often compounded quarterly.