Know More About the FD Eligibility Criteria, Minimum Amounts and Other Aspects
5 min read | 5 months ago
Fixed deposits are some of the most popular and safest investment options in India, cutting across age groups and demographics. What’s the reason behind it? In a world plagued with uncertainty, FDs offer guaranteed and secure returns over a specific duration. Yet, simply putting your money into an FD is not the solution. You should carefully understand the eligibility criteria, minimum investment amounts, and some other vital aspects before finalizing your decision. Here is a closer look at the same in this article
Eligibility Criteria for FDs
The eligibility criteria for fixed deposits vary from bank to bank, but the basic requirements are more or less the same. Let us take a look at them below:
Age:
The minimum age of the applicant to open the FD account is 18. A minor can also open an FD account, but a guardian has to operate the account until the minor completes 18 years of age.
Identity proof:
The applicant must provide individual proof of identity and Indian nationality, which can be a passport, driving license, Aadhaar card, voter card, and PAN Card. Address proof: The applicant must furnish a valid address proof, which can be a utility bill, bank statement, or rent agreement. Minimum deposit amount: The minimum amount will vary as per the bank. The minimum limit is generally Rs. 1000.
Tenure:
Minimum and maximum tenure for an FD also varies across banks. Generally, the minimum is 7 days and it will go up to 10 years as the maximum duration.
What is Minimum Amount for FDs
The minimum amount required to open an FD account differs from bank to bank. Typically, the minimum amount starts from Rs. 1,000, like in the case of Unity Small Finance Bank, but some banks may require a higher sum.
Do Fixed Deposits Have Special Benefits for Senior Citizens?
It is important to note that senior citizens may be eligible for a higher interest rate on their FDs. The senior citizen fixed deposit rates can be up to 0.5% higher than those offered to regular customers.
Other Aspects of FDs
Apart from the eligibility criteria and minimum amounts, there are several other aspects that you should be aware of before investing in an FD.
1. Tenure and flexibility of investment
RDs offer greater flexibility in terms of tenure and amount of investment, while FDs offer more fixed options. If you have a specific financial goal in mind and want to save regularly, RDs may be a better option. However, if you have a lump sum amount that you want to invest for a fixed period, FDs may be a better option.
2. Tenure
The tenure of an FD can range from 7 days to 10 years. It is an important factor to consider when investing. The longer the tenure, the higher the interest rate offered by the bank. However, it is important to note that longer tenures may also mean that your money is locked-in for a longer period of time
3. Interest Rates
The interest rates on FDs are higher than most savings accounts. The interest rate on an FD is fixed at the time of opening the account and remains constant throughout the tenure of the FD. The interest rate offered by banks on FDs varies from bank to bank and can range from 4.5% to 9%. Senior citizens may be eligible for a higher interest rate on their FDs, which can be as much as 9.5%.
4. Premature Withdrawal
FDs are known for providing guaranteed returns, but there may be penalties for premature withdrawal of an FD. If an investor decides to withdraw their money before the completion of the FD tenure, they may have to pay a penalty fee. The penalty fee varies from bank to bank and can be up to 1% of the invested amount.
5. Overdraft Facility
An overdraft facility on fixed deposits can be a lifesaver when you need quick access to cash. With this facility, you can withdraw up to a certain amount against your FD without breaking it. This means that you can enjoy the benefits of your fixed deposit while still having access to cash for unexpected expenses.
6. Tax Implications
The interest earned on an FD is taxable as per the income tax slab of the investor. If the interest earned on an FD is more than Rs. 40,000 in a financial year, then TDS (Tax Deducted at Source) is deducted by the bank. The TDS limit for senior citizens is Rs. 50,000.
Conclusion
Choosing the right tenure for your fixed deposit requires planning and research. Here are a few steps that you can follow to choose the right tenure:
1. Assess Your Financial Goals
Assess your financial goals and determine the amount you want to invest and the returns you expect from your investment.
2. Research the Interest Rates
Research the interest rates offered by banks and financial institutions for different tenure options. Compare the interest rates and choose the one that suits your financial goals.
3. Consider the Inflation Rate
Consider the inflation rate and choose a tenure that offers an interest rate higher than the inflation rate.
4. Evaluate the Liquidity Options
Evaluate the liquidity options offered by different tenure options. If you require quick access to your funds, choose a short-term fixed deposit.
5. Plan Your Investment
Plan your investment and choose the tenure that aligns with your financial goals.
Conclusion
FDs are a great investment option for those who want to earn guaranteed returns and keep their money safe. By understanding the eligibility criteria, minimum amounts, and other aspects of FDs, you can make informed decisions and maximize your returns accordingly. It is important to do your research and compare the interest rates offered by different banks before investing. Additionally, it is advisable to keep your investment portfolio diversified without relying only on FDs for your investment needs.
FAQs
1. What is the minimum amount required to open an FD account?
The minimum amount required to open an FD account varies from bank to bank, but it is usually around Rs. 1,000.
2. What are the eligibility criteria for opening an FD account?
Anyone who is a resident of India and has a valid PAN card can open an FD account in their name after a standard KYC process.
3. Can I withdraw my fixed deposit before maturity if I choose a longer tenure?
Yes, you can withdraw your FD before maturity, but you may have to pay a penalty fee that varies from bank to bank.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
