Why open Deposit Accounts?

[Shashank Bhaskar]

Primarily banks offer different investment instruments to help you save and earn interest. When you open a Deposit Account in a bank, you become a depositor or account holder. You deposit a certain amount every month or quarter to earn interest. There are different tenures and limits for investment like monthly, quarterly, half-yearly, and yearly.

A Fixed Deposit Account holds money for a fixed period. In return, the bank pays interest on it. You cannot withdraw money in the middle of the term. For example, if you invest Rs. 10,000 in it for five years, you receive interest at 10% per annum.

Reasons to open

Nowadays, maintaining a Bank Account is the norm. But it may not offer you attractive rates compared to Fixed Deposit interest rates. Hence, investors are opening Deposit Accounts through banking apps to increase their savings and make the most of their investments. There are various reasons to open them:

Easy access

Keeping your money in an FD Account helps you earn interest and is wiser than keeping it at home. You must remember to select a suitable tenure between seven days to 10 years to stay invested. Premature withdrawals attract penalties. But you can open it conveniently digitally without visiting the bank branch.

Returns

The Recurring Deposit is ideal for planning short-term goals to realise within one to three years. These may include savings for a downpayment of your new home, paying for children’s education, home renovation, saving for a degree abroad, etc.

Clubbed profit

The interest earned on FD clubs with your total income and taxed as per your slab. The money deployed to create it does not attract tax, but the interest does. Despite the savings in your Bank Account, you can earn extra income and fulfil your dreams even during a financial crisis.

Flexibility

Nowadays, you can open an RD online and benefit from its flexibility. Investors generally prefer them if they want to start an account for saving money and building an emergency corpus. You need to invest a fixed amount in small intervals and earn interest accordingly.

Saving habit

Maintaining an account and using the RD calculator helps inculcate the saving habit. RD is an investment tool allowing you to make regular monthly payments and save money for the long term.

Working

Banks offer schemes to investors to grow their wealth and earn returns. You can calculate them using the calculator. Use the slider to select the monthly investment amount. Select the tenure in months and move the slider for the interest rate. Recalculate the deposit anytime by changing the input sliders as per your requirements.