Fixed Deposit – An investment tool

When you keep a fixed sum of money as a deposit with a bank for a fixed period, it is called a Fixed Deposit (FD). It is one of the traditional and the safest means to invest your surplus. The bank pays you a fixed rate of interest for your deposits. FD can have variable tenure from 7, 15, or 45 days, one year, 1.5 years, or as high as ten years.

Mode of interest payment in a fixed deposit

You can have your pick in the mode of interest payment. These modes are monthly, quarterly, and annual or cumulative payment of interest. The amount and tenure of FD decide the interest you earn from your deposits. Higher the amount higher will be the interest. The highest FD interest rate is generally on deposits of a senior citizen. It is currently around 7% to 7.5%, in most of the banks, but PNB housing finance is offering as much as 8.7% on your deposits. You can calculate the interest on your FD for a specific period with the help of an FD interest calculator.

Can we earn monthly interest on FD?

Yes. You can surely earn monthly interest on our FD. Such type of FD status or interest payout arrangement is beneficial if you are an investor who depends on the interest amount as the only source of income or an add-on income per month. It is especially convenient if you are a retiree or a pensioner, as this monthly interest can be a steady pension. 

You may find that the rate of interest in a monthly income plan is slightly less than the annual or cumulative plan, but a monthly income plan will provide you with liquidity every month. However, you can give your mind a bit of solace in the fact that the same amount, if kept in current or savings account, would earn you lesser returns on your investment. 

Is a monthly income plan a good option?

It depends on your needs. If you do not have any other regular source of income or you want an add-on amount every month for your day to day expenditure, FD is the right this for you. You can enjoy all the features of a cumulative income plan with your monthly income plan also. The other benefits are nomination facility, long tenure, overdraft facility, tax benefit on interest, pre-mature withdrawals, and security of your deposit. 

The final decision is yours.

All in all, you can surely earn monthly interest on your FD if you select a monthly income plan, and you choose an excellent finance lender. Your selection of this plan depends upon your monthly need for the money. Although not offering the highest FD interest rates, this FD status provides you all the benefits of other fixed deposit (FD) plans. It is best for you if you need some amount every month. A monthly income plan can earn you interest amount and can supplement your monthly needs for finance.