5 Best 2-3 Year FDs With Good Returns Up To 7%

One of the most common investment strategies is the Fixed Deposit (FD). Numerous individuals, as the latter are assumed secure, favour bank FDs over stocks. Unlike in the case of bonds, the return received by a bank FD is set and defined at the time of investment. Fixed deposits are also known as term deposits because for a specified given time span or term, capital is deposited with a bank. Here are some considerations you need to know before opting FD as your personal finance.

How to open an FD account?

In case you have an active savings account with a bank you can open a fixed deposit account at the same bank. But without needing to open a savings bank account, some banks can allow you to open an FD account. But for the same your bank will ask you to go with the KYC procedure. And for the KYC process the bank will ask you to submit the photocopies of your ID proof, address proof and passport size photographs. Along with the application form the bank may ask you to submit your original KYC documents for verification.

Maturity period and deposit limit

To open an FD account the minimum deposit cap varies across banks. There is no limit, though, for the maximum deposit amount in an FD account. The minimum and maximum period provided for which it is possible to hold an FD differs from bank to bank. Currently, for a minimum duration of 7 days and for a maximum of 10 years, one can invest in FD. In compliance with your criteria, you can pick the period over which you want to hold the FD account.

2 Year FD Rates

 

Banks	ROI in %
Equitas Small Finance Bank	6.75
AU Small Finance Bank	6.50
DCB Bank	6.50
IndusInd Bank	6.50
RBL Bank	6.50

3 Year FD Rates

 

Banks	ROI in %
Equitas Small Finance Bank	7.00
AU Small Finance Bank	6.75
DCB Bank	6.75
RBL Bank	6.75
IndusInd Bank	6.50

Interest payouts

The rate of interest on fixed deposits (FD) provided does rely on the period over which you are invested in the FD and will also differ on FDs for the same period from bank to bank. Higher interest rates are usually provided to senior citizens on FDs across all the tenures. And in order to earn interest payouts one can select either a cumulative or non-cumulative alternative. Along with the principal amount the interest paid on deposit is reinvested and paid at the time of maturity under the cumulative option. In the case of a non-cumulative option, interest is added to the account of the depositors at the payout interval selected at the time the FD account is opened. Usually, one can pick from the alternatives presented by the bank to earn interest on a monthly, quarterly, semi-annual or annual basis.

Premature withdrawal facility

One can break his or her FD before the maturity date in the event of any emergency necessities and for the same the bank may impose a penalty on premature withdrawals. The amount of the penalty ranges across banks. The guidelines about premature withdrawals must be reviewed before opening an FD account because some banks provide FDs without an early withdrawal facility and don't impose penalties on premature withdrawals respectively.

Taxation

Against your fixed deposit, TDS is automatically imposed by your bank. Consequently, partly through your income tax filings and partly through TDS, the maximum taxes on your fixed deposit returns are charged. That being said, TDS is only withheld by the bank if the yields on fixed deposits surpass Rs 40,000 per year for the general public and Rs 50,000 per year for senior citizens. If the return surpasses Rs 40,000 or Rs 50,000, and you submit your PAN to the bank, the TDS on your fixed deposit income withheld by the bank will be 10 per cent. A TDS withheld by the bank on your fixed deposit revenue is 20 percent if you do not support the bank with your PAN. That being said, in those situations, only if you submit Form 15G or 15H to your bank then only you can claim interest income without TDS. Optionally, at the beginning of the financial year, Form 15G for non-senior citizens and 15H for senior citizens must be submitted to prevent the full inconvenience of the additional TDS deduction.

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