As you know that a Fixed Deposit (FD) is an investment option offered by banks that gives you higher rate of interest than a regular savings account. By investing in an FD, you can achieve your financial goals comfortably due to higher returns offered by it.

Bank Of America FD provides an option to deposit lump sum amount for a specific period, ranging from 7 days to 10 years. You can choose any of the tenures offered by Bank Of America FD according to your convenience and financial objective. As soon as you select the tenure and deposit the amount in Bank Of America_ FD, it will start earning an interest based on the tenure of the deposit. Customer is allowed to deposit lump sum money into a fixed deposit only once into his FD account at the time of opening the account with the bank and afterwards he cannot deposit additional money in the same FD account.

Key Difference: A fixed deposit, also known as a term deposit, is a financial instrument provided by the banks, which offer a higher rate of interest than a regular savings account. Fixed deposit and term deposit are two common words in banking.

You can also get tax benefits under section 80C of the Income Tax Act on an amount between Rs. 100 to 1.5 lakh by investing in Bank Of America FD for a tenure of 5 years or more.

HSBC Fixed Term Deposit Account With a Fixed Term Account, you get the option of a high liquidity savings solution that will maximise earnings of idle funds. Existing customers can open a new account from the comfort of your home using online banking. Understanding Fixed Term. A common example of a fixed-term investment is a term deposit in which the investor deposits his or her funds with a financial institution for a specified period of time.

Following table provides you Bank Of America FD Rates of various tenors. Also, given below is the facility/ option, through which you can calculate the interest rate and the maturity value of your Bank Of America FD for different tenures by clicking on the 'calculate' button provided in the table.

Bank Of America Fixed Deposit Interest Rates (as on 06 Mar 2021)

Features & Benefits: Bank Of America Fixed Deposit

• Competitive interest rates are offered with flexible FD tenures to suit your investment plan.
• FD account can be opened online or by visiting your nearest Bank Of America branch.
• No cap on the Maximum Amount of FD
• FD Tenures: 7 days to 10 years
• Different interest payout options such as monthly, quarterly, etc.
• Loan/ Overdraft against FD facility is available upto 85% of the FD amount.
• Easy and fast liquidity options are available.
• Nomination facility is available.
• Tax benefit of amount up to Rs 1,50,000, through tax saving term deposit scheme
• Part withdrawal facility and auto-renewal facilities are also available
• Senior citizens can enjoy higher interest rate as compared to regular citizens
• NRE, NRO and FCNR deposit facility is offered by the bank

Who is Eligible for Bank Of America Fixed Deposit

Fixed Term Deposit Rates Nz

Any of the following persons is eligible to invest in fixed deposits (FD):

• Individual
• Minor
• HUF
• Proprietary Firm
• Partnership Firm
• Limited Liability Partnership (LLP)
• Company
• Association of Persons (AOP)
• Body of Individuals (BOI)
• Local Authority
• Trust
• Non-Resident Indian (NRI)
• Registered Society

Important Things to Know Before Investing in Fixed Deposits

• Always compare tenure-wise FD interest rates of different banks before finalizing the bank for opening an FD account, in order to get maximum interest rate on selected tenure.
• The tenure for most bank fixed deposits varies from 7 days to 10 years. You should choose the FD Tenure according to your convenience and objective behind investment.
• Opt for interest payout options such as monthly or quarterly, if required. Otherwise, choose cumulative option so that you can receive lump sum amount when FD gets matured.
• You can also avail loan or overdraft against FD, if you have immediate requirement of funds.
• If your annual income is non-taxable, you can submit Form 15G or Form 15H in order to avoid TDS.
• Don't forget to make nomination in your FD account.
• If you are a senior citizen then open your FD in a bank which offers extra interest of 0.25% to 0.75% to senior citizens.
• When you open fixed deposit online or offline, do not forget to give instructions on what to do on maturity of your FD. If you do not give any instruction, your fixed deposit will be renewed automatically on maturity.

Calculation of Interest on FD of Bank Of America

Interest on FD for different tenures is calculated in following manner:

1. Simple interest is paid at maturity for fixed deposit tenure of less than 6 months.
2. Interest is calculated on a quarterly basis for fixed deposit tenure of 6 months & above.
3. Cumulative Interest/ re-investment interest is calculated every quarter, and is added to the Principal such that Interest is paid on the Interest earned in the previous quarter as well.
4. In case of monthly deposit scheme, the interest shall be calculated for the quarter and paid monthly at discounted rate over the Standard FD Rate

Bank Of America FD Interest Calculator

Bank Of America FD Interest Calculator is an online financial tool that allows you to calculate the maturity value of your fixed deposit at the interest rate offered by bank. The amount of FD, interest rate, deposit tenure and compounding frequency of interest together determine the maturity amount of the FD at the end of the tenure.

Automatic Renewal of Bank FD

Bank FD matures on specific date. On maturity, if you have not given any specific instructions such as payout or renewal of FD, most of the banks automatically renew the FD for the same period for which it was initially made at the interest rate prevailing on the date of maturity of FD. This is called Automatic Renewal of Bank FD.

You should choose the option on the account opening form, if you do not want the bank to auto renew your FD. You have 2 options on the account opening form while depositing money in FD, first one is auto renew and second one is deposit of amount to your account after maturity. In case you have not mentioned any option on the account opening form then you will need to visit the bank branch on maturity day of your bank FD and opt for credit of the final proceeds of your bank FD into your savings account if you do not want an auto renewal of your FD.

Bank FD News Mar 2021

13-01-2020: SBI revised FD interest rate

SBI has announced a cut in retail fixed deposits of FD rates. The latest FD rates on SBI deposits is effective from 10th January 2020. The bank has cut the FD rates by 15 bps on long-term deposits maturing in 1 year to 10 years. Now FD interest rate for 7 to 45 days is 4.50%, for 46 to 179 days is 5.50%, for 180 days to 1 year is 5.80% and for 1 year to 10 years is 6.10%.

09-01-2020: Axis Bank reduced FD interest rate

Axis Bank reduced interest rates by up to 20 bps from January 9. FDs for less than Rs 2 crore and with the tenor of less than 1 year will earn 6.40%, for the tenor of 5 years to up to 10 years, FD rates is 6.50%.

07-01-2020: HDFC Bank deposits up by 25% (YoY) in 2019

The largest private sector lender HDFC Bank's deposits up by 25% (YoY) in 2019. Its deposits are at Rs 10.67 trillion as of December 31, 2019 growing by 25% as compared to Rs 8.52 trillion as of December 31, 2018..

Fixed Term Deposit Calculator

24-12-2019: HDFC Bank revised FD interest rate

The revised rate for FDs maturing in 9 months 1 day to less than 1 year will be 6.05%. Term deposits maturing in 1 year to 2 years will fetch an interest rate of 6.3%, 2-3 years 6.40%, and 3 years to 10 years 6.3%.

01-12-2019: PNB cuts off FD rates

With effect from December 1, 2019, FDs for less than Rs 2 crore and the tenor of 271 days to below 1 year will be 6% for general customers and 6.5% for senior citizens. For the tenor of 5 years to up to 10 years, PNB has FD rates of 6.3% for general customers and 6.8% for senior citizens.

12-11-2019: ICICI Bank reduces FD interest rate

The interest rates on ICICI Bank FD for less than Rs 2 crore and the tenor of 185 days to 289 days will be 5.75%, for 5 years to up to 10 years will be 6.40% and 6.9% for senior citizens. Its interest rates will be effective from December 7, 2019.

Public Sector Banks FD Interest Rates

Private Sector Banks FD Interest Rates

Fixed Term Deposit Meaning

A fixed deposit (FD) is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate account. It is known as a term deposit or time deposit in Canada, Australia, New Zealand, India and The United States, and as a bond in the United Kingdom and for a fixed deposit is that the money cannot be withdrawn from the FD as compared to a recurring deposit or a demand deposit before maturity. Some banks may offer additional services to FD holders such as loans against FD certificates at competitive interest rates. It's important to note that banks may offer lesser interest rates under uncertain economic conditions. The interest rate varies between 4 and 7.50 percent.^[1] The tenure of an FD can vary from 7, 15 or 45 days to 1.5 years and can be as high as 10 years.^[2] These investments are safer than Post Office Schemes as they are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC). However, DICGC guarantees amount up to ₹ 500000(about $6850) per depositor per bank.^[3] They also offer income tax and wealth tax benefits.

Explanation[edit]

Fixed deposits are a high-interest-yielding term deposit and offered by banks in India. The most popular form of term deposits are fixed deposits, while other forms of term deposits are recurring deposit and Flexi Fixed deposits (the latter is actually a combination of demand deposit and fixed deposit)^{[citation needed]}.

To compensate for the low liquidity, FDs offer higher rates of interest than saving accounts.^{[citation needed]} The longest permissible term for FDs is 10 years. Generally, the longer the term of deposit, higher is the rate of interest but a bank may offer lower rate of interest for a longer period if it expects interest rates, at which the Central Bank of a nation lends to banks ('repo rates'), will dip in the future.^[4]

Usually in India the interest on FDs is paid every three months from the date of the deposit (e.g. if FD a/c was opened on 15 Feb, the first interest installment would be paid on 15 May). The interest is credited to the customers' Savings bank account or sent to them by cheque. This is a Simple FD.^[5] The customer may choose to have the interest reinvested in the FD account. In this case, the deposit is called the Cumulative FD or compound interest FD. For such deposits, the interest is paid with the invested amount on maturity of the deposit at the end of the term.^[6]

Although banks can refuse to repay FDs before the expiry of the deposit, they generally don't. This is known as a premature withdrawal. In such cases, interest is paid at the rate applicable at the time of withdrawal. For example, a deposit is made for 5 years at 8%, but is withdrawn after 2 years. If the rate applicable on the date of deposit for 2 years is 5 per cent, the interest will be paid at 5 per cent. Banks can charge a penalty for premature withdrawal.^[5]

Banks issue a separate receipt for every FD because each deposit is treated as a distinct contract. This receipt is known as the Fixed Deposit Receipt (FDR), that has to be surrendered to the bank at the time of renewal or encashment.^[7]

Many banks offer the facility of automatic renewal of FDs where the customers do give new instructions for the matured deposit. On the date of maturity, such deposits are renewed for a similar term as that of the original deposit at the rate prevailing on the date of renewal.

Income tax regulations require that FD maturity proceeds exceeding Rs 20,000 not to be paid in cash. Repayment of such and larger deposits has to be either by 'A/c payee' crossed cheque in the name of the customer or by credit to the saving bank a/c or current a/c of the customer.

Nowadays, banks give the facility of Flexi or sweep in FD, where in customers can withdraw their money through ATM, through cheque or through funds transfer from their FD account. In such cases, whatever interest is accrued on the amount they have withdrawn will be credited to their savings account (the account that has been linked to their FD) and the balance amount will automatically be converted in their new FD. This system helps them in getting their funds from their FD account at the times of emergency in a timely manner.

Benefits[edit]

• Customers can avail loans against FDs up to 80 to 90 percent of the value of deposits. The rate of interest on the loan could be 1 to 2 percent over the rate offered on the deposit.^[8]
• Residents of India can open these accounts for a minimum of seven days.
• Investing in a fixed deposit earns customers a higher interest rate than depositing money in a saving account.
• Tax saving fixed deposits are a type of fixed deposits that allow the investor to save tax under Section 80C of the Income Tax Act. ^[9]

Taxability[edit]

Tax is deducted by the banks on FDs if interest paid to a customer at any bank exceeds Rs. 10,000 in a financial year. This is applicable to both interest payable or reinvested per customer. This is called Tax deducted at Source and is presently fixed at 10% of the interest. With CBS banks can tally FD holding of a customer across various branches and TDS is applied if interest exceeds Rs 10,000.Banks issue Form 16 A every quarter to the customer, as a receipt for Tax Deducted at Source.^[10]

However, tax on interest from fixed deposits is not 10%; it is applicable at the rate of tax slab of the deposit holder. If any tax on Fixed Deposit interest is due after TDS, the holder is expected to declare it in Income Tax returns and pay it by himself.

If the total income for a year does not fall within the overall taxable limits, customers can submit a Form 15 G (below 60 years of age) or Form 15 H (above 60 years of age) to the bank when starting the FD and at the start of every financial year to avoid TDS.

How bank FD rates of interest vary with Central Bank policy[edit]

In certain macroeconomic conditions (particularly during periods of high inflation) a Central Bank adopts a tight monetary policy, that is, it hikes the interest rates at which it lends to banks ('repo rates'?). Under such conditions, banks also hike both their lending (i.e. loan) as well as deposit (FD) rates. Under such conditions of high FD rates, FDs become an attractive investment avenue as they offer good returns and are almost completely secure with no risk^{[citation needed]}. These can be checked with the excess rates in the country.

See also[edit]

References[edit]

Fixed Term Deposit Bank Of America

1. ^Sumant Khanderao Muranjan (1952). Modern banking in India. Kamala Pub. House. p. 80.
2. ^Mohan Lal Tannan (1965). Banking law and practice inIndia. Thacker. p. 23.
3. ^'DICGC – A guide to FD'. Archived from the original on 22 August 2013. Retrieved 6 January 2014. 3. What is the maximum deposit amount insured by the DICGC? Each depositor in a bank is insured up to a maximum of 100,000 (Rupees One Lakh) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.
4. ^R. P. Maheshwari (1997). A Complete Course in ISC Commerce. Pitambar Publishing. p. 102. ISBN978-81-209-0643-3.
5. ^ ^abRaj Kapila; Uma Kapila (May 2001). India's banking and financial sector in the new millennium. Academic Ffoundation. p. 199. ISBN978-81-7188-223-6.
6. ^Ambika Prasad Dash (2009). Security Analysis And Portfolio Management (Paperback) , Second Edition. I. K. International Pvt Ltd. p. 55. ISBN978-93-8002-610-7.
7. ^Muralidharan. Modern Banking: Theory And Practice. PHI Learning Pvt. Ltd. p. 274. ISBN978-81-203-3655-1.
8. ^Nico Swart (2004). Personal Financial 'Learn to earn money' Management. Juta and Company Ltd. p. 338. ISBN978-0-7021-5514-7.
9. ^'Benefits of Investing in Tax Saving Fixed Deposits'.
10. ^Outlook Publishing (22 May 2008). Outlook Money. Outlook Publishing. p. 27.

Fixed Term Deposit Definition