Should You Opt For Fixed Deposit Or High-Interest Savings Account?

A savings account is the most basic form of secure investment as almost everyone might have opened a savings account at least once in their lives. It is a convenient option to save your money because you can deposit as much money as you want and you can withdraw it without any limitations.

An FD or fixed deposit is another form of secure investment wherein you deposit a lump sum amount at a fixed rate of interest for a fixed time period. Upon maturity, you get your principal amount along with interest earned on your fixed deposit.

Fixed deposits and savings accounts are popular among investors as both provide security and stability of your funds. However, FDs have an edge over savings accounts as they offer significantly high interest rates as compared to fixed deposits.

Let’s compare both these low-risk investments on various factors.

1) Interest rate
The interest rates on fixed deposits vary for different banks and financial institutions. Most of them provide an interest rate of over 7%, but the highest interest rates can be a little over 9% as well. Company fixed deposit offer higher interest rates as compared to bank fixed deposits. Bajaj Finance Fixed Deposit provides interest rates of up to 8.75%, and senior citizens can avail interest rate of 9.10%. This makes it one of the best high yielding fixed deposits in India.

Interest rates of high-interest savings account usually lie between 4-5%. However, for that, you have to maintain a minimum balance.

Also, when you invest in short-term fixed deposits, you can protect your funds against inflation and ensure steady growth.

2) Periodic interest payouts
You can choose between cumulative and non-cumulative fixed deposits. Non-cumulative FDs enable you to earn periodic interest payouts. This can help you plan your expenses accordingly and also ensures the availability of a regular income stream. A savings account does not have any such option available. However, you can withdraw your funds from your savings account as and when required.

3) Collateral for loan
You can raise a loan against FD by pledging your FD as collateral. You can avail a loan up to 90% of the maturity value of your FD, without breaking your FD. The interest rate is also low. But you cannot use the funds in your savings account to raise a loan.

4) Early withdrawal
Fixed deposits are tenor based investments, and therefore early withdrawals do tend to charge you with some penalty. Most banks charge with 1 percent penalty for premature withdrawals. However, you do not have to pay any penalty for withdrawing Bajaj Finance Fixed Deposit (minimum lock-in period is three months).

Since it is not a time-based investment, premature withdrawals are out of the question when it comes to a high-interest savings account. You can also close your accounts whenever you feel like by just filling a form and submitting it to your bank or financial institution. However, some banks might charge you with a nominal fee at the time of account closure.

Why investing in Bajaj Finance FDs is a smarter option than a high-interest savings account?

Credit ratings

• Bajaj Finance has been rated with the highest credit quality (MAAA/stable rating by ICRA and FAAA/Stable rating by CRISIL). This makes it a reliable investment to enhance your wealth.
Online application
• Experia-your online fixed deposit account provides you with a hassle-free online application system to manage and track your FD investments.
Calculate your earnings
• You can use the online FD calculator to calculate your returns based upon interest rates, investment tenor, and deposit amount.
Special tenor FD
• You can earn 0.25% increased ROI on a special tenor 15-month FD as compared to regular 12-month FD.

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