• FD Vs NSC

    If you have cash and an investment choice to make, then NSC as well as fixed deposits are the two most popular financial tools. However, both these tools are beneficial in their own unique ways.

    National Savings Certificate or NSC is one of the primary savings scheme floated and held by the government of India. The scheme offers lucrative returns to customers and is a safe bet for people looking for a low-risk investment choice. On the other hand, fixed deposits are instruments offered by both private and public banks and even by other non-banking financial institutions too.

    Which financial tool should be preferred out of NSCs and FDs and why?

    Based on various parameters listed below, you can make a choice between which financial tool to opt for, fixed deposits or NSCs. Both these investment options have their pros and cons and their demand may vary depending upon customers preferences.

    • Rate of interest offered
    • NSCs

      Returns offered by NSCs are in the range of 8.5% - 8.8% which is comparable to what is offered by fixed deposit schemes of banks and NBFCs. However, interest rates on NSCs are calculated every six months and hence the effective rate of interest comes to around 8.78% - 9.00%.

      Fixed Deposits

      Fixed deposit schemes offer interest rates that vary with respect to the lock-in period. Apart from regular schemes, special and higher rates of interest are offered to customers. FDs allow almost accurate calculation of final returns if you know the rate of interest being offered by the bank on your deposit.

    • Lock-in period (Liquidity of cash)
    • NSCs

      Lock-in period for NSC schemes is either 5 years or 10 years. The rate of interest offered on 10 year term NSCs is greater than that offered on 5 year term. Some customers thus are not comfortable with such long lock-in periods and hence prefer to invest their money in fixed deposit schemes which offer higher liquidity than NSCs.

      Fixed Deposits

      Fixed deposit schemes offer interest rates that vary with respect to the lock-in period. Apart from regular schemes, special and higher rates of interest are offered to customers. Customers can choose deposit periods depending upon their convenience and the rate of return they are fine with. Even when fixed deposits are made for a specific tenure, the money can be pre-maturely withdrawn with or without paying any pre-mature withdrawal fee.

    • Applicable tax on returns earned
    • NSCs

      Returns earned from NSCs are exempt from income tax under section 80C of the Income Tax Act. This signifies that actual returns are even higher than those estimated. This makes NSC a good investment choice for customers who do not mind locking their money for longer periods.

      Fixed Deposits

      Returns earned on fixed deposits are taxable and hence actual returns might not be as high as quoted by banks. However, certain fixed deposit schemes like the tax saver deposit scheme offered by almost all major private and public sector banks, is a good scheme under which tax deduction under section 80D of the Income Tax Act, can be claimed.

    • Premature withdrawal feature
    • NSCs

      National Savings Certificate has this one major drawback of unavailability of premature withdrawal before the tenure of 5 or 10 years gets completed. Your NSC can only be withdrawn prematurely under the following three conditions –

      • On death of the holder
      • On forfeiture of scheme by some gazette government officer
      • When withdrawal is ordered by court of law

      Fixed Deposits

      Premature withdrawal of fixed deposits is allowed by almost all banks and NBFCs. This pre-closure, however, is charged a specific pre-mature withdrawal fee which depends upon the bank in which you have your fixed deposit account. Some banks do not charge any fee for withdrawing deposits prematurely.

    • Loan facility
    • NSCs

      National Savings Certificate are a great financial tool to use as collateral against secured loans. For loans such as car loans, home loans etc. banks expect customers to deposit some form of collateral as security against their loans. These are used to recover money in case customers default to pay off their loans. Financial instruments like NSCs, fixed deposit schemes and insurance policies make great collaterals.

      Fixed Deposits

      Fixed deposits too like NSCs are preferred by banks as collateral for obtaining secured loans. Fixed deposits with the same bank are even better when availing loans. These deposits are kept as security by banks so that in case a customer defaults in paying off his/her loan, banks are able to recover some amount of money through these deposits.

    • Safety of deposit amount
    • NSCs

      National Savings Certificate are financial instruments issues by the government of India and as such the safety of capital invested is quite high.

      Fixed Deposits

      Fixed deposits too like NSCs are quite secure. However, FD schemes by public sector banks are considered to be safer than those offered by private sector banks and NBFCs. Customers who are conservative with respect to their savings habit should opt for deposits offered by government aided banks rather than private banks.

    To sum up, it is safe to say that fixed deposits are financial instruments that offer not only great benefits but also flexibility to customers. Deposit schemes can be availed as per the convenience of customers. Their maturity period, premature withdrawal and denomination can be controlled by customers. On the contrary except for the amount of NSC, tenure and premature withdrawal is not by any means in the hands of customers. Any customer who wants to avail more liquidity should opt for fixed deposit schemes and should try levelling the tax return benefit of NSCs by opting for tax-saver deposit schemes.

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    Fixed Deposit vs National Savings Certificate (NSC) Reviews

    • ICICI Bank Fixed Deposit
      "Customer centrice & User friendly app"
      0.5 4.0/5 "Great!"
      I am doing Fixed Deposit with ICICI BANK and its been around 5years. They haven't been paying good interest and its more or less same like other banks as I used to hold my salary account with ICICI, I have decided to be with one bank. There is no locking period and its flexible. They do give good support and the app is user friendly. Even deposit account can be opened through i-mobile or net banking itself.
      Was this review helpful? 0
      , nasik
      Reviewed on Oct 15, 2019
    • SBI
      SBI Fixed Deposit
      "Good"
      0.5 3.0/5 "Satisfactory"
      I had a Fixed Deposit in State Bank of India, I have completed the tenure before 3months ago. I have no issues with the customer service. They are given me 7% interest rate for 2years. There is no profit and processing fee. I got an online access, where I can check the interest rate anytime on the YONO app or else SBI online.
      Was this review helpful? 1
      , tirupati
      Reviewed on Oct 15, 2019
    • SBI Fixed Deposit
      "Interest charges are good. "
      0.5 3.0/5 "Satisfactory"
      I have invested some money through FD. My salary account is in SBI so i have a zero ATM charges and the limit is not actually set by SBI. They do have short term FDs which is pretty good. I have invested the money of Rs. 60000 and the interest rate is 10.01% for the tenure period of 16 months. There is no lockin period. There is no hassle to getting the money back.
      Was this review helpful? 7
      , kolkata
      Reviewed on Oct 01, 2019
    • Dena Bank Fixed Deposit
      "Good plan for senior citizen"
      0.5 2.0/5 "Expected more"
      I have invested the money in Dena bank through Fixed deposit and the growth is not that much good. They are not taking any hidden charges. Only because of the Government undertaken bank, i have selected them. They are providing a interest rate of 6% per annum. I have invested the money of Rs. 2 lakhs. There is a lockin period of 1 year.
      Was this review helpful? 3
      , new delhi
      Reviewed on Sep 24, 2019
    • Axis Bank Fixed Deposit
      "Interest should be increased for FD"
      0.5 3.0/5 "Satisfactory"
      I have opt for fixed deposit for the tax saving purpose because I have chosen five years tenure with AXIS Bank, still its going on. Only once I Invested my money it has the locking period of five years. I have option to check my transactions through mobile app. But I have concern about the interest rate is very lesser for this FD.
      Was this review helpful? 5
      , hyderabad
      Reviewed on Sep 19, 2019
    • SBI Fixed Deposit
      "FD process should be simpler"
      0.5 1.0/5 "Really Bad"
      I had fixed deposit with SBI then I withdrawn the amount, I done Rs. 3 lakhs of investment on my daughter name then I taken the liquidity to purchase the land, at the time I struggled a lot to take that money because the process was difficult to withdrawn the money after seven months of tenure.
      Was this review helpful? 15
      , madurai
      Reviewed on Sep 03, 2019
    • Union Bank of India Fixed Deposit
      "Not good"
      0.5 3.0/5 "Satisfactory"
      I had a Fixed Deposit with Union Bank of India and its closed 18 to 19 months due to personal reasons. I am doing investment but my experience is not good with FD account. In my home town, there is no other banks so just decided to go with this bank. The returns are good.
      Was this review helpful? 7
      , bangalore
      Reviewed on Aug 28, 2019
    • HDFC Bank Fixed Deposit
      "Good to go with HDFC"
      0.5 5.0/5 "Blown Away!"
      I have one FD with HDFC, I deposited Rs. 1 lakh, I was opt for 45 days of tenure. Finally I got 6.25% of interest for 45 days. It won't cover the tax, if we need tax benefits we should go for five years term. I can track the details through netbanking, on the maturity date the amount credits automatically in the account. Even the notification can customized.
      Was this review helpful? 8
      , bangalore
      Reviewed on Aug 27, 2019
    • HSBC Bank Fixed Deposit
      "wrong calculation of interest rates"
      0.5 0.5/5 "Unacceptable"
      HSBC staff wrongly pre closed my fixed deposit .. and calculated the interest rates wrongly and when asked them for clarification never got back .. even after following up with them repeatedly for more than 3 months.. would highly recommend not using their services.
      Was this review helpful? 4
      , visakhapatnam
      Reviewed on Aug 24, 2019
    • SBI Fixed Deposit
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I do have a Fixed deposit account with SBI and it was carried out by Mom and even I have account for my daughter. Its still running and they have Google application separately to access online. The returns are good. I am doing monthly investment and it was opened quite a long may be 4 years.
      Was this review helpful? 9
      , ahmedabad
      Reviewed on Aug 23, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 5.0/5 "Blown Away!"
      I just opened a Fixed Deposit with ICICI BANK and have not done any survey on this. I am account holder with them so it was easy to do FD account even they are providing 7% interest rate. The process is very user friendly and never faced any hassle. I could access this account via online.
      Was this review helpful? 6
      , new delhi
      Reviewed on Aug 21, 2019
    • Post Office Fixed Deposit
      "Good for future"
      0.5 3.0/5 "Satisfactory"
      In post office rate of interest is higher for the fixed deposit when compared to the bank, I invested Rs. 5000 on monthly basis its comes in a year Rs. 60,000 after 5 years I got Rs. 3.75,000 I got Rs. 75,000 extra. The service is not comfortable if we have any relative who working there it would supportive or else difficult.
      Was this review helpful? 17
      , burdwan
      Reviewed on Aug 09, 2019
    • SBI Fixed Deposit
      "Good for future saving"
      0.5 5.0/5 "Blown Away!"
      I have FD with SBI, I have opt for one year term there is no such limitation for depositing the money. The interest rate is good for the FD, the online banking is convenient to take liquidity. They resolve the queries on time. Its most safe and secured.
      Was this review helpful? 4
      , visakhapatnam
      Reviewed on Aug 08, 2019
    • SBI Fixed Deposit
      "Average"
      0.5 4.0/5 "Great!"
      I have selected state bnak of indis fixed deposit amount 1 lakhs , Tenure 5 years and Rate of interest 8 percentage after renewal fixed deposit 6 percentage is very less .while document directly bank . Customer service is not good and responsive.
      Was this review helpful? 8
      , kochi
      Reviewed on Aug 05, 2019
    • Kotak Fixed Deposit
      "Excellent Banking"
      0.5 5.0/5 "Blown Away!"
      I activated FD account with Kotak, I have been maintaining this account since when I opened saving account, I converted Rs. 5000 for one year. They are providing interest around 7.6% per annum, the online netbanking and mobile app is very convenient for deposit to FD.
      Was this review helpful? 5
      , mumbai
      Reviewed on Aug 03, 2019
    • ICICI Bank Fixed Deposit
      "Good"
      0.5 4.0/5 "Great!"
      I have invested my FD with ICICI BANK and also have a 3in1 account with them. The interest rate is pretty good. Recently started before 6months, I can do premature withdrawal and also have selected a locking period of 3 years. The customer service is good and overall am satisfied with this bank.
      Was this review helpful? 4
      , mumbai
      Reviewed on Aug 01, 2019
    • Post Office Fixed Deposit
      "Safe and Secured"
      0.5 4.0/5 "Great!"
      My Post office branch is located in own campus hence there is no queue. I opened the fixed deposit, I made one time investment for five years its has tax exemption. They are providing 7% of interest for per annum. I believe it has online access as well.
      Was this review helpful? 13
      , bangalore
      Reviewed on Aug 01, 2019
    • SBI Fixed Deposit
      "Too much good scheme"
      0.5 5.0/5 "Blown Away!"
      Chosen my fixed deposit from State bank of India. I have invested the money of Rs. 57000 and SBI is a most popular bank all over the India and offering all the facilities compared to bank. Since i have a salary account with them, its easy to transfer the money. They are providing the interest rate of 6.5%.
      Was this review helpful? 7
      , kolkata
      Reviewed on Jul 31, 2019
    • Union Bank of India Fixed Deposit
      "Good Investment"
      0.5 4.0/5 "Great!"
      Union of India fixed deposit is same as other investment. Being an existing customer I have opt for one year of fd, the online banking feature is good to open and closing the account, they was no charges for the liquidity of fund before the maturity.
      Was this review helpful? 3
      , mumbai
      Reviewed on Jul 29, 2019
    • SBI Fixed Deposit
      "Good investment plan"
      0.5 4.0/5 "Great!"
      Chosen my fixed deposit from state bank of India because the given rate of interest is high. They are not deducting any service charges. I have invested the money of Rs. 1 lakhs and there is no lockin period and i have chosen the plan for 1 year and they are giving a interest rate of 6.75%.
      Was this review helpful? 11
      , bangalore
      Reviewed on Jul 25, 2019
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