1. What is a Fixed Deposit (FD)?

A Fixed Deposit (FD) is a financial instrument where an individual deposits a lump sum amount with a bank or financial institution for a fixed tenure at a predetermined interest rate. The money cannot be withdrawn before the maturity period without penalty.

2. How does a Fixed Deposit work?

When you open an FD, the bank pays you interest on your deposit amount for the agreed tenure. The interest is either paid periodically (monthly, quarterly, etc.) or at the time of maturity, depending on the type of FD.

3. Can I break my Fixed Deposit before maturity?

Yes, you can break an FD before its maturity date, but you will incur a penalty. The interest rate for premature withdrawal is usually lower than the agreed rate, and some banks also charge a penalty fee.

4. What happens if I miss the maturity date?

If you miss the maturity date, the FD typically gets auto-renewed for the same tenure at the prevailing interest rates, unless you specify otherwise. You will need to contact the bank for any adjustments.

5. What is TDS on Fixed Deposit?

If the interest earned on an FD exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year, the bank will deduct Tax Deducted at Source (TDS) at the rate of 10% (unless the individual submits Form 15G/15H to prevent TDS deductions).

6. Can I take a loan against my Fixed Deposit?

Yes, you can take a loan against your FD. Most banks offer loans up to 90% of the FD value at a lower interest rate compared to regular loans.

7. Are Fixed Deposits safe?

Yes, Fixed Deposits are considered a safe investment as they are backed by the bank. In India, FDs are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank