1. Guaranteed Returns
FDs offer fixed interest rates, shielding you from market volatility. For example, a 5-year FD at 7% will earn exactly ₹35,000/year on ₹10L, regardless of economic conditions.
2. RBI Insurance Protection
Up to ₹5 lakh per bank is insured, making FDs safer than stocks or crypto. This protection covers both principal and interest.
3. Tax-Saving Options
5-year tax-saving FDs under Section 80C let you invest up to ₹1.5 lakh annually. Example: A ₹5L FD saves ₹15,000 in taxes (for 30% slab investors).
4. Senior Citizen Benefits
Retirees get 0.5% extra interest. A ₹10L FD at 7.5% for 5 years yields ₹3,75,000 total interest (₹3,50,000 for regular citizens).
5. Flexibility in Tenure
Choose from:
- Short-term: 7 days to 1 year
- Medium-term: 1–3 years
- Long-term: 5–10 years
6. Loan Against FD
Banks offer loans up to 90% of your FD value at lower interest rates. Example: Get a ₹9L loan against a ₹10L FD at 1% above FD rate.
7. Sweep-In Facility
Automate savings with sweep-in FDs. ICICI Bank’s Flexi FD converts savings account balances above ₹1 lakh into FDs overnight.
8. Zero Market Risk
Unlike mutual funds, FD returns don’t depend on market performance. Perfect for risk-averse investors.
9. Partial Withdrawals
Some banks (e.g., Kotak) allow partial withdrawals after 3 months, though penalties may apply.
10. Inflation Hedge
While not as strong as equities, FDs with 7%+ rates can partially offset inflation (current CPI: 5.4%).