We all get confused when it comes to the deposition schemes that are given by banks and several Non-Banking Financial Companies. It is as difficult as choosing an ice cream from an ice cream parlor. But when it comes to saving your money, obviously you need to do some research and then select the right one. We often visit the bank to do a fixed deposit but get puzzled when the bank executive suggests a term deposit. Here we will give you a piece of detailed information about the fixed deposit and term deposit as well as the differences between them. To know the full details, one can check the website of Standard Chartered Fixed deposits.
What is a fixed deposit?
A fixed deposit is offered by any bank and also Non-Banking Financial Companies, which allows you to save a fixed amount of money for a particular time duration. The interest rate that is provided over the fixed amount is higher than the normal savings bank account. There is a criterion of this type of account that you can not withdraw the amount before getting matured. The interest rate varies from 4% to 7.5% for fixed deposits and the tenure time can be of 7 days, 15 days or 45 days and up to 1.5 years.
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What is a term deposit?
The term deposit is another name for a fixed deposit. Most of the bankers use term deposits in order to indicate a fixed deposit. The name fixed deposit is used more in India or other Asian countries, while foreign countries such as Australia, Canada, New Zealand, etc. used the name term deposit.
There is a thin hairline difference between fixed deposit and term deposit.
Organizational difference: Such as if you are depositing the amount in a bank then it is called a fixed deposit. While the term deposit is a kind of company deposit. If you are going to deposit a lump sum amount for a particular duration in a post office, then it will be a term deposit.
Tenure duration: If you are depositing the amount for three months, six months or less than that duration, the deposition is named as the term as you are depositing for a term. However, when you invest the amount for more than six months it will be called a fixed deposit.
Difference in interest: As the duration of the term deposit is less than the duration of a fixed deposit the bank offers more interest rates while you are going for a fixed deposit rather than a term deposit. When you deposit an amount for a particular duration of time the bank uses the money for giving loans to other lenders and charges an interest rate also. If you opt for a fixed deposit then the bank will utilize the amount for a longer duration than that of for term deposit. As the bank is earning more on a fixed deposit scheme the interest rates offered by the bank are subsequently higher.
Taxation difference: But there is simply no difference in taxation for both fixed deposit and term deposit. As in both cases, the amount is submitted for one time there will be a TDS deduction if the interest crosses INR 10,000 per year. In the case of form 15G or form 15H submission, no TDS will be deducted as per the rules. As in the case of fixed deposit you are depositing the money for more time than a term deposit, you will get more interest on the same amount at the time of maturity.
Difference in need: When you are in the need of money at a short duration of time then you can opt for a term deposit as your money will be engaged for a short period of time. After that particular period, you will be able to use the money as well as its interest. But if you opt for a fixed deposit the tenure duration is higher so you won’t be able to withdraw the money for a long duration. It is a drawback of a fixed deposit. Though if you think on a long run basis then a fixed deposit is perfect for you.
Availability difference: when you are engaging your money to the bank for a fixed deposit, it will consume more time to get mature rather than the term deposit. You can not use that money for at least the tenure period. On the other hand, if you deposit the money for a short period of time and get another more attractive option to increase you saving you can use that same amount of money along with its total interest and deposit on a more profitable scheme to enhance your saving format.
Now that you know the tiny differences between the fixed deposit and term deposit, you will feel more confident and sorted about depositing your money for a more proper scheme. Understand your need and deposit your money accordingly in order to make more profit.
