Why FD is Better than Savings Account

If your financial goal is to increase your assets with high interest rates and flexibility, fixed deposits may be a good option. When you open a fixed deposit, you receive a fixed rate of interest until the maturity date. In addition to offering high returns, fixed deposits come with several other advantages that make them a popular investment option.

Top 5 Reasons Why Fixed Deposit is Better Than Savings Account

Take a look at the top 5 reasons why a fixed deposit is better than a savings account:

1. Attractive interest rates -  Fixed deposits earn a high interest rate resulting in better returns. A short-term fixed deposit provides higher returns than a savings account. Senior citizens are offered an additional interest rate along with other benefits.
2. Periodic interest payout - A fixed deposit allows you to receive interest payouts based on your preferences. The interest rate on non-cumulative fixed deposits can be received monthly, quarterly, half-yearly, or annually. If you invest in a cumulative fixed deposit, you will receive a higher interest payout. Periodic interest payouts are highly beneficial for senior citizens who need steady income after retirement.
3. Guaranteed returns - Fixed deposit investments provide assured returns regardless of the fluctuations occurring in the market. The returns on your investment can be estimated with the BankBazaar online fixed deposit calculator. Thus, you can organise your finances in a better manner and grow your investments.
4. Loans against fixed deposits can be availed -  If there is a financial emergency or long-term expenses, you can get loans on your fixed deposit conveniently. The principal amount of the deposit serves as collateral for this type of loan. In most cases, the loan amount sanctioned is a percentage of the principal deposit amount.
5. Save and increase earnings - A savings account allows you to easily withdraw funds. However, with a fixed deposit, your money is locked in for a certain amount of time. This instils financial discipline which lets you maximise your savings. Fixed deposits provide additional perks such as compoundable interest rates, which help in growing your wealth.