As compared to a bank FD, a company FD plan offers you a higher ROI laced with multiple other benefits. Read on and uncover more details!
Whether or not to invest in a fixed deposit scheme by a bank or a non-banking finance company has always been an issue for debate among prospective investors.
If you are all set to invest in a bank’s FD plan, it would also be good to see the features of banks’ and company’s FD before zeroing on a decision.
Going through the features and benefits of a bank and a company FD account will help analyze your requirements and outcome from an FD (Fixed Deposit) investment before deciding.
Company fixed deposits: Features and benefits
- A company fixed deposit is a scheme which is provided by non-banking finance companies (NBFCs) and other leading financial institutions
- They are your regular fixed deposit plans, but the only thing is that they offer higher FD interest rates, helping your investments grow super-quick
- As compared to mutual funds and other investment plans, fixed deposit is unaffected by market conditions and hence, are low-risk investments
- You get to select a flexible tenor between 1 year and 5 years
- You can liquidate these assets in times of financial emergencies as per the terms of your service provider
- Standard citizens can earn 7.85% and senior citizens 8.20% interest rate on your FD investment
- You can withdraw an FD prematurely as well
- You are free to use money from FDs for purposes such as purchasing an asset, financial a foreign holiday and more
- You can avail the facility of a cumulative and non-cumulative payouts
- Your FD investments are safe as they carry safety ratings from reputed agencies such as CRISIL and ICRA
Bank fixed deposits: Features and benefits
- Nationalized and private banks offer a bank’s fixed deposit plan
- The biggest draw of a bank’s fixed deposit is that they offer a lower FD interest rates compared to a company’s fixed deposit. Thus, the purpose of your investment may not fulfil your expected goals
- Banks provider a good degree of safety as every fixed deposit is insured up to Rs.1 lakh by the Reserve Bank of India (RBI)
- Banks may have strict rules, and terms and these terms could make the possibility of a premature withdrawal difficult
- As compared to company’s fixed deposit plans, the FD schemes of banks could provide lesser degree of liquidity
- You may have to pay the penalty for withdrawing the FD money before its maturity as per the terms and conditions of the banks
- If you already have a savings account with a bank you want to invest in an FD, you could get some additional facilities which may be decided by a bank
- Even the FD payouts of the banks offer cumulative and non-cumulative modes
The Bottom Line
You just saw the differences between the features and benefits of a bank and a company fixed deposit scheme. Knowing these differences would help you make a better decision whether to go for a bank FD or a company’s FD.
Before you opt for any of them, you should always study the market, know your needs, and understand if an FD scheme fulfils your goal. Once you have reviewed everything, then only you should opt for a fixed deposit plan.
If you are still not clear, you could also take the expert advice of a known financial expert to become eligible or zero down on a prudent decision. Happy FD investment!