Bank FDs key facts: Bank FDs are generally the best option for safe and fixed returns. The best thing about bank FDs is that the investor gets to know at the time of deposit, how much return he will get according to the tenure.
That is, if the investor wants fixed funds in a certain time frame, then bank FD easily fulfills this need. There is no risk of market volatility in this. Often we do not pay attention to the maturity period while making bank FD, while even a difference of 1 day can harm you. For example, if a bank has an FD tenure of less than 2 years and FD tenure of 2 years or more, then interest rates vary by just one day. Hence, it should be kept in mind while making FD.
How much profit and loss with difference of 1 day
Generally people make FD according to the period called round figure like 6 months, 1 year, 2 years. In some banks, for this round figure period, the interest rate on FDs varies from 1 or a little more or less days to this. Therefore, before opening an FD, make sure to know the FD tenure and the interest on it. It is possible that instead of round figure period, some extra interest will be available for a few days more or less.
For example, in SBI, 4.40 percent annual interest is being given on FDs ranging from 211 days to less than 1 year. That is, if the term of the FD is kept from 1 year to less than 2 years, then the interest rate will be 5.0 percent. That is, with a difference of just 1 day, there was a difference of 0.60 percent in the interest rate.
Similarly, if you make FD in SBI for short term i.e. 7-45 days, then the interest rate is 2.90 percent. But as you make the tenure of 46 days, the interest rate directly increases by 1 percent i.e. 3.90 percent. Therefore, one should always keep in mind the difference of 1 day at the time of making FD.
How safe is the deposit in Bank FD
Generally, people consider bank FDs to be completely safe and invest their huge amount in them. Although the amount in FD is safe, but if the bank defaults in any condition, then only the deposit of up to 5 lakh of the investors remains safe. The same rule is applicable to finance companies as well. Deposit Insurance and Credit Guarantee Corporation (DICGC) gives insurance guarantee on bank deposits up to Rs 5,00,000 only.
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