Let us tell you that there is no limit to deposit money in the savings account, the bank decides the maximum amount of money in FD according to its own. There is no fixed tenure of savings account, whereas FD can be from days to 10 years. Understand all the details of FD and Savings Account.
New Delhi. Along with earning money, its savings are also important, if we look at inflation in today’s era, it is only savings with the help of which life remains stable. There are various financial options available in the market for savings. These range from savings accounts to recurring deposits and fixed deposits to investment instruments in equity and stock markets. However, all these are different investment options.
But all have one thing in common, that is, the return on deposit will be considered successful only when there is good return in hand while avoiding the risk of market volatility. Otherwise what is the point of that investment that is always breathless that the money does not get written off. To overcome this fear, two options have always been considered good for good earnings. These are fixed deposits and savings accounts.
Fixed deposits or FDs and savings bank accounts or SBI come under the category of safe investments. In both these instruments, the depositor gets safe returns i.e. returns along with fixed earnings. The headcount is also very low compared to other investments. As an investor, both these instruments can be a good way to save in the bank. However, it cannot be considered as the most profitable option because it is considered as a stable investment in which one can put money in peace. But such investments usually do not give impressive returns. Savings account interest rates range between 2.5% to 5.5%. The advantage is that the little money that is added, the interest keeps adding up on it.
Both have their own distinct advantages:
Saving from your earnings is very important. As all days are not equal, life has its ups and downs and hence you must raise some money for emergency. However, only saving is not enough but it is important to invest wisely in instruments with good returns. Investing wisely helps the money saved grow, effectively making the money work for you or capitalizing in the long run. It is financially secure. Thus, if you keep a lot of money in a savings bank account, it may not be a wise approach.
What is the difference between Savings Account and FD:
There is no limit to deposit money in the savings account, the bank decides the maximum amount in FD according to its own rules. There is no fixed tenure of savings account, whereas FD can be from days to 10 years. The rate of interest on savings account is not fixed and depends on the market, the interest rate is fixed on the tenure of investment in FD and the age of the depositor. Senior citizens get more interest in FD.
Interest is calculated every day in savings account, quarterly interest is calculated in FD. Withdrawal limit depends on the minimum balance in the savings account, you can withdraw money on maturity in FD. There is a provision of fine for withdrawing money before that. Can not take loan against savings account, whereas loan is available on FD and only the deposit amount of FD is considered as bank security. Tax exemption is not available on savings account, whereas FD gets the benefit of tax exemption under section 80C.
5 big advantages of FD:
Inflation destroys your buying power with your hard earned money. That is, the value of money is less and the value of goods seems more. In such a situation, the earnings should be such that it can compete with the inflation rate. For this reason, keeping the money dormant or just keeping it in a savings bank account may not bring much benefit to you. FD amplifies this benefit. A bank FD enables you to earn higher interest rates which can help you get better returns against inflation.
The returns on bank FDs are fixed – there is no market volatility and any other risk. FD is more suitable for business or self-employed people because if you get lump sum money in hand, you can be worried by depositing it. Jobseekers can earn good money in savings account. If you want to avoid market risk or are not a risk-averse earner, then FD is a better tool for you. In this, money safety and complete guarantee of returns are given.
The facility of loan against FD is very important. Since you do not have to pay anything separately for mortgaging and only your FD deposit acts as a pledge, one can easily get a loan. For this, there is no need to show your credit history, even banks can take credit cards against FD.
