Types of Fixed Deposits
As the name suggests, a fixed deposit (FD) is a fixed sum of money that is in custody in an FD account for a pre-determined time period earning fixed deposit rates. The tenure for a fixed deposit ranges from 15 days to 3 years and the fixed deposit rates vary between 3 % and 7.5. The time period of an FD may be extended up to 10 years as per the requirement of the depositor. A FD account normally yields greater fixed deposit rates than a standard account, because of its fixed period of time. FDs are also known as term or time deposits. FDs can be classified as:
• Certificate of Deposit
• Revolving Bank Term Deposit
• Unchanging Term Deposit
• Holiday Account
Certificate of Deposit (CD)
A CD is a kind of fixed deposit account that can be bought in varying sums from a traditional bank, credit union, or other depository organization. A Certificate of Deposit is a commercial document that substantiates the financial value of the deposit made; its date of maturity and the rate of interest are valid on the sum loaned. The maturity period of a CD ranges from one month to five years. Interest rates accumulated on CD are quoted on a yearly basis.
Revolving Bank Term Deposit
This deposit renovates itself mechanically for another period of the same length subsequent to the expiry of its loan period. Investors can deposit money into a revolving term account via a cashless transfer by direct transfer or from an existing account. The period of this deposit varies from one week to one year.
Unchanging Term Deposit
This deposit account is also called as a single term deposit, and it does not renovate automatically following its date of maturity. An unchanging FD can be opened with a maturity period that ranges from one month to 36 months.
Holiday Account
The other name of a holiday account is the Christmas club account, which is a special category of fixed term deposit that permits a depositor to save, and put in, small denomination money until the account matures. Money cannot be taken out of the account until it reaches the date of maturity.
Summary: Choosing the type of FD account depends upon the requirement of the depositor.
As the name suggests, a fixed deposit (FD) is a fixed sum of money that is in custody in an FD account for a pre-determined time period earning fixed deposit rates. The tenure for a fixed deposit ranges from 15 days to 3 years and the fixed deposit rates vary between 3 % and 7.5. The time period of an FD may be extended up to 10 years as per the requirement of the depositor. A FD account normally yields greater fixed deposit rates than a standard account, because of its fixed period of time. FDs are also known as term or time deposits. FDs can be classified as:
• Certificate of Deposit
• Revolving Bank Term Deposit
• Unchanging Term Deposit
• Holiday Account
Certificate of Deposit (CD)
A CD is a kind of fixed deposit account that can be bought in varying sums from a traditional bank, credit union, or other depository organization. A Certificate of Deposit is a commercial document that substantiates the financial value of the deposit made; its date of maturity and the rate of interest are valid on the sum loaned. The maturity period of a CD ranges from one month to five years. Interest rates accumulated on CD are quoted on a yearly basis.
Revolving Bank Term Deposit
This deposit renovates itself mechanically for another period of the same length subsequent to the expiry of its loan period. Investors can deposit money into a revolving term account via a cashless transfer by direct transfer or from an existing account. The period of this deposit varies from one week to one year.
Unchanging Term Deposit
This deposit account is also called as a single term deposit, and it does not renovate automatically following its date of maturity. An unchanging FD can be opened with a maturity period that ranges from one month to 36 months.
Holiday Account
The other name of a holiday account is the Christmas club account, which is a special category of fixed term deposit that permits a depositor to save, and put in, small denomination money until the account matures. Money cannot be taken out of the account until it reaches the date of maturity.
Summary: Choosing the type of FD account depends upon the requirement of the depositor.
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