9 Benefits of a Fixed Deposit Account with DBS Bank

Fixed Deposits offer several benefits, including guaranteed returns and capital protection, making them a safe investment option. They also provide flexibility in terms of tenure and allow for easy loans against the deposit, offering financial liquidity without breaking the investment.

Key Takeaways

A Fixed Deposit (FD) is a safe and steady investment option.
It provides financial security during emergencies.
You can even take a loan against an FD investment for added liquidity.

Introduction

“Be prepared” - Scout & Guide motto

Given the uncertain times that we live in, this motto by Gen. Baden Powell is quite relevant. It is great to be optimistic and believe that we will lead a safe and financially secure life without unsurmountable struggles. However, the realist in us must be prepared for the bad days. Thankfully, there is a reliable financial safety net that we can invest in—Fixed Deposits (FDs).

By the time you reach the end of this article, you will understand the benefits of a Fixed Deposit account.

What is a Fixed Deposit?

Regarded as one of the safest investments, a Fixed Deposit is deemed the favourite investment instrument for investors worldwide due to its many benefits. Also known as a term deposit, a Fixed Deposit is one of the most reliable financial instruments out there. For instance, you get safe, steady and fixed returns on a fixed date based on your chosen interest payment plan. You can choose from monthly, quarterly, or half-yearly interest payment models. You may also opt for cumulative interest payment and build a lumpsum amount with your FD investment.

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Advantages of Fixed Deposits

Let us explore the reasons that make fixed deposits so popular amongst everyone. You can hold as many Fixed Deposits of varying amounts as you like, without any limitations, and enjoy the following advantages of Fixed Deposits.

Fixed Returns

The FD interest rate is fixed, ensuring that your investment remains secure regardless of market fluctuations. You will consistently earn a predetermined interest amount, resulting in fixed returns on specified dates according to your chosen payment plan. Additionally, you can use an FD calculator to easily compute the interest on a particular amount, helping you plan your investment more effectively.

Avail loan against FD

One major advantage of Fixed Deposits is the ability to avail a loan against the deposited amount. This feature provides immediate liquidity without breaking the FD, allowing you to meet urgent financial needs while continuing to earn interest. Typically, loans against Fixed Deposits have lower interest rates compared to personal loans, making them a cost-effective borrowing option. Additionally, the application process is usually quick and hassle-free, adding to their convenience.

Capital Security

With FD investments, you do not have to worry about capital erosion. Your money stays with the bank, which pays you the interest owed to you on time. Once the FD matures, you get back the entire investment amount. As such, you do not lose any money from the investment.

Customisable

You can start an FD for as less as Rs. 5,000 without an upper limit. There is no upper limit on how much you can put in an FD. You can choose your tenure (short-term, mid-term, or long-term). This makes it possible for anyone to open an FD.

Moreover, if you currently have an account with DBS Bank, you can easily open an FD account using the Digibank app itself.

Easy liquidity

In times of a cash crunch, you can use your FD investment to help you out. You can withdraw the principal amount of your FD along with whatever interest you may have accrued for that time. The process to withdraw the FD is quick, so you can access your cash almost as soon as you need it.

Collateral ability

Looking for a loan but don’t have any collateral to offer? Don’t worry; you can pledge your FD investment and get you as much as 95% of the loan amount. The loan amount will depend on the FD amount and your bank’s terms and conditions.

Tax-saving

Under Section 80C of the Income Tax Act, 1961, an individual can claim up to Rs. 1,50,000 as deductions. Your investment qualifies as tax-deductible under this section only if you invest in a tax-saving Fixed Deposit, typically offered by banks and post offices. This type of investment reduces your tax liability considerably.

Insured savings

The Deposit Insurance and Credit Guarantee Corporation, a subsidiary of the RBI, insures your deposit for up to Rs. 5,00,000. This means that even if your bank is in a financial crisis, your FD is safe.

One-time effort

You do not have to keep track of the market to understand how your FD is performing. Plus, there is no jargon involved. This simplicity makes Fixed Deposits an excellent choice for beginners, , such as a young student, who are new to saving and investing.

Conclusion

Now that you know the diverse advantages of Fixed Deposit, you can chart out a plan to secure your financial future. Whether you are a parent looking to save for your child’s higher education or a professional looking to retire into luxury; or even someone looking to develop a contingency fund, an FD investment makes it possible.

So, plan your finances wisely and open a Fixed Deposit with returns of up to 7.50% using the Digibank app by DBS.

Frequently Asked Questions

Is FD 100% safe?

Fixed Deposits (FDs) are generally safer than many other investment options, but they are not entirely risk-free. Investors should be aware of several risks, including interest rate risk, inflation risk, and default risk. These factors can affect the overall return and security of the investment, making it important to consider them when opting for FDs.
Is it OK to break FD before maturity?

When you prematurely withdraw a FD, banks impose a penalty as compensation. The penalty varies depending on the bank or financial institution and the specific terms of your FD, typically ranging from 0.5% to 1% of the interest rate. While early withdrawals are allowed, these penalties help banks recover some costs associated with the disruption of the agreed deposit term.
What is the minimum amount required to open an FD account with DBS?

The minimum amount required to open an FD account with DBS is Rs. 5000. However, for recurring deposit it is Rs. 100.

Download DBS Bank app to start the paperless process of opening your fixed deposit account.

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