If you are confused about whether to keep your money in a fixed deposit (FD) or a savings account, read on to get a better idea.
Fixed deposit
It is an investment option that allows you to grow your savings securely. Banks and Non-Banking Financial Companies (NBFCs) offer this service. You can invest the money for a fixed duration and earn interest periodically or on maturity.
Savings account
Banks and non-banking institutions offer a savings account where you can safely put your money. It is the most secure way to keep your savings and earn regular interest from them.
Points of comparison
Understanding fixed deposit vs. savings account will help you decide which option is more suitable. Here are a few differences between them:
- Interest rate
This is the most important distinguishing factor between an FD and a savings account. FDs offer much higher interest than a savings account, resulting in faster growth of your idle money.
- Flexibility
A savings account offers similar returns across all financial institutions. Its features remain the same irrespective of the institution. Conversely, FD offers you more convenience. You can invest for a preferred tenure, and the interest rate increases depending on how long you stay invested.
- Loan against the account
If you ever face any financial emergency, FDs allow you to take a loan against the principal sum. Savings accounts do not have this feature.
- Saving
If you want to save money and grow it into a considerable fortune, FDs may benefit you more compared to savings accounts. Savings accounts pay decent interest rates, but FD rates are much higher and can accumulate into a lump sum over a short period.
- Benefit for senior citizens
The returns from savings accounts remain the same for everyone, but FDs offer a higher interest rate for people over the age of 60. Thus, in the case of retired individuals, FDs have the edge over savings accounts.
What should you select?
Even though your choice between FD and savings accounts depends on your requirements, FDs have a few advantages over savings accounts. For example, Mahindra Finance FDs offer considerable returns, multiple alternatives in tenure, protection against market fluctuation, and many other plus points. If you meet the fixed deposit eligibility conditions, FDs can help you grow your investments faster than a savings account. So, visit the Mahindra Finance website and open an FD now!
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