Special FDs refer to fixed deposit schemes offered by banks or financial institutions that come with unique features or benefits beyond regular fixed deposits.
Fixed Deposits (FDs) have long remained a preferred choice of risk-averse investors and senior citizens who do not wish to take high risks and want to avoid market volatility. There are many types of fixed deposits, including Standard Fixed Deposit, Regular Income Fixed Deposit, Tax Saving Fixed Deposit and Senior Citizen Fixed Deposit.
Another category, Special FDs refer to fixed deposit schemes offered by banks or financial institutions that come with unique features or benefits beyond regular fixed deposits. Special FDs can be useful if you are looking for higher returns on your investments. These might include higher interest rates, special terms, or additional perks.
Here are a few things investors should know about special fixed deposits:
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Interest Rates
Some banks offer special fixed deposit schemes with higher interest rates compared to regular FDs. These rates may be applicable for specific tenures or for a limited time as part of promotional offers.
Senior Citizen Benefits
Banks often come out with special FD schemes for senior citizens with higher interest rates than those offered to regular investors. These schemes may also have additional benefits such as monthly interest payouts.
Tax implications
The interest earned from fixed deposits is generally taxable as per the investor’s income tax slab. Ensure you are aware of the tax implications associated with the special FD scheme you choose. However, senior citizens get tax benefits.
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Lock-in periods and penalties
Some special fixed deposits may have lock-in periods or penalties for premature withdrawals. Understand the terms and conditions regarding withdrawals to avoid any unexpected charges.
Credit Rating
Ensure that the bank or the institution offering the special FD has a good credit rating and is regulated by the Reserve Bank of India (RBI) to ensure the safety of your investment.
Compare with Regular FDs
Before investing, compare the special FD scheme with regular FDs offered by various banks. Analyse the interest rates, terms, penalties, and other features to determine which suits your financial goals better.
Read the Agreement
Carefully read the terms and conditions, including the maturity period, interest payout frequency, renewal options, and any associated fees or charges.
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Diversification
Consider diversifying your investments rather than putting all your funds into a single special fixed deposit. This can help spread risk and potentially optimize returns.
Always conduct thorough research and consider your financial goals before investing in special fixed deposits. Performing your own due diligence will help you make the most of your investment. The table below compares the interest on special FDs by several banks. You can compare and choose based on your requirements.
Interest on Special FDs by Banks
Data as on respective banks’ website on 21 November 2023.
Interest rate on special deposits i.e. higher rate on FD for a specified day/period is shown in the table. Deposit (amount below Rs 2 Cr) for selective public & private banks considered for data compilation. If there are multiple special tenor FDs offered by a bank, only tenors for which highest interest is offered are considered. Table excludes the interest rate offered on FD for regular period.
