What is a Fixed Deposit?

A Fixed Deposit (FD) is a popular financial instrument offered by banks and other financial institutions, designed to help individuals grow their savings with minimal risk. It is a type of deposit account where you deposit a lump sum amount for a predetermined period at a fixed interest rate. In return, you earn interest on your deposit, which is typically higher than what you would get from a regular savings account.

When you invest in a Fixed Deposit, you commit your money for a specific period, ranging from a few months to several years. During this tenure, the interest rate remains fixed, regardless of fluctuations in market rates. FDs are also called term deposits. Here’s a step-by-step look at how a Fixed Deposit works:

• Deposit Amount: You deposit a lump sum into the FD account.
• Tenure: Choose a tenure for your deposit.
• Interest Rate: The bank or financial institution provides an interest rate for the duration of the FD.
• Interest Accrual: Interest is calculated on the principal amount and is either paid periodically (monthly, quarterly, or annually) or compounded to the principal.
• Maturity: At the end of the tenure, you receive the principal amount plus the interest earned.

1. Interest rates

Interest rates on FDs are fixed when you open the deposit and the rate depends on the term that you wish to hold it for. Visit the HDFC Bank website to view the latest FD interest rates.

2. Secure investment

A Fixed Deposit offers guaranteed returns. Unlike market-led investments, where returns fluctuate over time, the returns on an FD are fixed when you open the account. Even if interest rates fall after you open a Fixed Deposit, you will continue to receive the interest decided at the start. FDs are considered much safer than investments in other assets like equity.

3. Return on investment

Your return on an FD will depend on the interest rate and the type of deposit you choose. You can opt for a monthly or quarterly pay-out of interest or the reinvestment option, which will benefit you from compounding. Check the HDFC Bank FD Interest Calculator to calculate your return on investment.

4. Flexible Tenures

HDFC Bank offers Fixed Deposits in flexible tenures ranging from 7 days to 10 years.

5. Loan against FD

While FDs are fixed for an agreed tenure, you can take a loan against it when you need funds. HDFC Bank offers loans against FD as an overdraft, and you can get up to 90% of your FD amount. The benefit is that your FD continues to earn interest; you don’t have to withdraw your FD prematurely and end up paying a penalty.

Read more on how to open an FD Account today.

​​​​​​​You can create your Fixed Deposit Asset today with an HDFC Bank Savings Account. New customers can book a Fixed Deposit by opening a new Savings Account, existing HDFC Bank can book their Fixed Deposit by clicking here.

Make a smart and safe move. Book a Fixed Deposit today.