Know This About FD Interest Rates

To help you understand how a fixed deposit works, here is a step by step breakdown of the process

• Firstly, opening an FD account is different from opening a Savings or a Current account. In the case of fixed deposits, you invest a specific amount of money that is blocked for a specific period of time. In other words, you are not allowed to withdraw the money before the scheduled date.
  
• Nonetheless, you will get the flexibility of choosing the time period or tenure of the deposit.The time frame can be a minimum of 7 days and the maximum time period can be up to 10 years.
• Once you have selected the time period, the bank will offer you the interest rate based on the amount you invested, and when the deposit tenure ends, you will earn a good amount of interest.
• In simple terms, your interest income is added to your principal amount after a specific time interval, and it leads to an increase in the invested money.
• You can either choose to receive the interest at the time of maturity or you can choose to receive it on a monthly, quaterly, half-yearly, yearly payout basis.

Creating wealth is a tough task. It requires the perfect balance between investment and risk. One easy way to create wealth is to invest your money in a fixed deposit. To help you understand a fixed deposit, you should know about its key features. Read them as they will enable you to make a smart decision.

A Fixed Deposit Interest rate is defined as the interest rate which is paid by the bank to the account holder for investing their money in their respective bank. Different banks offer different rates of interest on Fixed deposit accounts. If you are confused about which bank to opt for to open an FD account, make use of this simple formula

A = P (1 + r/4/100) ^ (4*n) or A = P (1 + r/25)4n

 Here, A stands for the amount on maturity,  P stands for the amount deposited, and n stands for the frequency of compounded interest

A=P+ (1+R/N/100)

The Interest on Fixed Deposit is completely taxable. Here is a step-by-step procedure to explain to you how the interest income is taxed in an FD account.

To make sure that you invest in the right FD, keep in mind these pointers to make the right decision.

FD interest rates depend on various factors. The interest rate ranges from 2.50% to 9%, depending on these factors. So, let us have a look at the factors which determine FD rates.