Fixed Deposit Vs Savings Account: Which is the best?


A fixed deposit is one of the safest and secured investment options where you can place your surplus money which will give assured returns. Be it a self-employed or salaried individual, savings is something significant for your life. Planning your savings at an early life stage is a wiser decision you can make for your life.

But a standard savings account can only bring you a minimal amount of returns, whereas when you want a high performance.  While comparing a savings account and fixed deposit, you can know how fixed deposit is the best option for you and high-interest rates on its investment.

Here are specific reasons that will let you know that a fixed deposit is best compared to a savings account:

Avoid Market Fluctuations:

By investing in a fixed deposit, you not only receive good returns but can also avoid market fluctuations which makes it very safe. When you want to know how much returns you can get from the fixed deposit, you can use the available online calculators. When you want to have a roadmap on growing your savings, then planning your finances prior will help you better. When compared to a savings account, a fixed deposit is one of the robust investment options.

Higher Interest Rate:

When you invest in a savings account, you will get a very low-interest rate on your returns. Also, the interest rate might change due to market changes. But when you invest in a fixed deposit, you will get higher interest, and also the interest rate will be constant throughout the tenure, which will offer you stable returns.

As an investor, you will get a chance to accelerate your funds with a fixed deposit, with the concept of the power of money. A fixed deposit has tenures ranging from days to years, which you can choose according to your financial stability. When you feel that you might need your investment in a little while, then opt for a short tenure.

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Improves Your Savings Habit:

With a savings account, you can withdraw the money anytime from your account which will make you use it unnecessarily. Whereas when you invest in a fixed deposit, you will have a certain lock-in period, so unnecessary withdrawal is minimised to an exceptional level which also ensures higher savings.

Also, it will in-turn boost the funds by compounding the interest which will add up extra for accumulating your savings.

Periodical Interest Payouts:

When you plan for a fixed deposit scheme, you can plan your expenses according to your needs and make use of alternate interest payout options. Some people will have this fixed deposit as saving as well as an investment that can give some returns useful for regular expenses.

With a fixed deposit tenure, there is a facility where you can opt to get your interests paid out on a specific period. The periodic interest payout can be monthly, bi-monthly, quarterly, half-yearly and annual basis which you choose according to your needs. When you don’t want to receive the interest rates now, you can choose to get it at the tenure end.

Loan Against Fixed Deposit:

The most significant benefit of a fixed deposit is that you can use it as collateral and get a loan against it. Compared to other sources of investment, a fixed deposit is best for providing a loan against it, since it has a very low-interest rate compared to a standard loan. Even during the loan tenure, you will still be receiving the interest for your fixed deposit.

Tax Benefits:

There are many tax benefits which you can avail with a fixed deposit investment. When you choose a Tax savings FD which has a tenure of years, it will be beneficial. Not only that but opening a fixed deposit itself will be best for your savings. You can choose among the many schemes which are offered for growing your wealth with a fixed deposit investment.

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Senior Citizens Benefited Most:

Compared to an average individual’s senior citizens will get additional interest rates on their fixed deposit. The fixed deposit will act as financial support for senior citizens to enjoy their post-retirement years for full filling their regular expenses.

Tailored For Your Financial Needs:

There won’t be many variations in a savings account, and the interest rate will also be fluctuating, which is why people opt for a fixed deposit. The fixed deposit is of many different customised types which will suit your needs. When you are a person who wants a monthly income post-retirement, then you can choose for monthly interest payout options.

When you want to have a lump amount at the tenure end, you opt for a fixed deposit where you can get your invested amount and interest paid out together at the tenure end. You can invest and customise your fixed deposit according to your convenience and maximise your returns by tailoring your fixed deposit as per your financial goals.

You can potentially maximise your wealth and choose the plan which best suits you compared to a regular savings account. You can also achieve financial freedom by investing in FD, which offers you a higher interest rate with excellent security.

Difference Between Savings and Fixed Deposit:

Savings is a good thing to do. But when your money is not growing its just a waste of time. So when you want to save as well as increase your cash exponentially, then a fixed deposit is the best option for you. A fixed deposit will act as a piggy bank which will help you at times when you’re in need and also keep on increasing your savings.

There are pros and cons in each investment, but when it comes to a fixed deposit, people prefer to choose because it has a slight risk and gives you huge returns. But still, there are some taxes which will be deducted when your fixed deposit is less liquid.

When you don’t want to get stuck between market fluctuations and savings, then a fixed deposit is the best option which you can choose to make your investment. You might not know when a sudden financial need will arise, so it’s always essential to have some money in savings.

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