Term Deposits – Know More, Save More

By Author: Vijay K Shetty
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Term deposits are also known as Fixed Deposits. A Term Deposit account is one which allows the Bank’s customers to deposit money into the account for a fixed term period.

Why should people opt for term deposits?
When the deposit period lapses, people opting for term deposits get interest on the amount deposited, after the fixed term has been completed.

What makes these different from other form of savings?
Well, the interest rates offered by these policies can be as high as 9.5% or more. There are various term deposit facilities offered today. It is imperative that you pick and choose the one that benefits you most and fits your financial planning.

There are eligibility factors that are required to open a term deposit account. What are they?
Term deposit accounts can be opened by a single person or can be opened by two or more people in their joint names. In the later case, the mature amount will be payable to both or all of them or to the survivor(s) or it can be paid to either or anyone or more or the survivor(s).

If someone intends to open a term deposit for a minor, a natural ...
... guardian on behalf of the minor is required to open and operate the account. However, a minor aged 10 or more can operate the account by himself/ herself. Clubs, associations, societies, educational institutions and other similar bodies can also open and operate a term deposit account.

Term deposits offer floating interest on their deposits made. To avail of the floating interest option, the account holder must not withdraw the amount before a minimum period of 3 years. The minimum deposit amount in case of a floating deposit scheme is Rs. 1 Lakh while the maximum is Rs. 10 Lakh.

But what are floating interest rates?
The interest rates are reset every year in March and September based on a link interest rate. To aid in operational convenience, floating term deposit accounts can be opened only in select branches of the bank. However, the account holder must be completely certain of moving to the floating interest rate term deposit since shifting from this scheme to a fixed interest rate scheme is not possible.

Vijay K Shetty,
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