Why bank fixed deposits are a good avenue to park your money

Most of us keep some money in saving banks account because of two reasons – it is safe and can provide regular income via interest. It is also liquid and can be accessed in times of need.  However, the returns on savings bank are not high and may not meet the regular income needs.

Banks offer comparatively low rate in savings bank deposits which simply means that your money is not growing at the right pace. Therefore, you need to think that how you can earn more returns provided you are getting safety and guaranteed return by keeping your money in banks only. Within the bank deposit space, a better alternative is fixed deposits. Bank FDs are one of the safest investment-cum-savings avenue which can help you get 7-9% return annually. These days, you do not even need to go to the bank to open an FD, but can do it online.

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Private sector banks cut rates for savings deposits

Having improved their ratio of low-cost current and savings accounts (CASA) in the past six years, new age private sector banks are now rationalising their deposit rates by steadily raising their deposit slabs, which is likely to help them improve margins from here on. IndusInd Bank, Yes Bank and Kotak Mahindra Bank have either fully or partially tweaked their savings rates since September after seeing a sharp rise in CASA ratio since the RBI allowed banks to set their own savings rate in October 2011. 

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Types of Bank Accounts in India (Deposit Accounts)

CURRENT DEPOSITS / ACCOUNTS

SAVING BANK / Saving Fund  DEPOSITS / ACCOUNTS

RECURRING DEPOSITS / ACCOUNTS

FIXED DEPOSITS / ACCOUNTS OR TERM DEPOSITS

 

Traditionally banks in India have four types of deposit accounts, namely Current Accounts, Saving Banking Accounts, Recurring Deposits and, Fixed Deposits.   However, in recent years, due to ever increasing competition, some banks have introduced new products, which combine the features of above two or more types of deposit accounts.  These are known by different names in different banks, e.g 2-in-1 deposits, Smart Deposits, Power Saving Deposits, Automatic Sweep Deposits etc.  

What is  a Current Account ?  Who uses current accounts? 

Current Accounts are basically meant for businessmen and are never used for the purpose of investment or savings.  These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day.  Most of the current account are opened in the names of firm / company accounts.   Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties.  No interest is paid by banks  on these accounts.  On the other hand, banks charges certain  service charges, on such accounts.   

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Loan & Deposit Calculators

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