Why Is a Fixed Deposit Interest Better Than a Savings Account Interest?

A fixed deposit account is a savings account with a fixed interest rate and a fixed term. This means that your interest rate will not change during the term of your deposit, and you will know exactly how much interest you will earn when you make your deposit. A savings account, on the other hand, has a variable interest rate that can change at any time. This means that you may not know how much interest you will earn on your account until you make a withdrawal.

The main advantage of a fixed deposit account is that it provides stability and peace of mind. Best fixed deposit interest rate  you will earn, and you can plan your finances accordingly. With a savings account, on the other hand, you may be surprised by a sudden change in the interest rate that can reduce the amount of interest you earn.

Fixed deposit account offers a higher interest rate than a savings account. This is because the bank knows that you are committed to keeping your money in the account for a certain period of time, and they are willing to offer a higher interest rate to attract your business.

Important reasons that show why Fixed Deposit Interest better than a Savings Account Interest

  • FD provides better interest rates than a savings account

FD provides better interest rates than a savings account. FD is a long-term investment, and banks typically offer higher interest rates for long-term investments. FD is a fixed-rate investment, which means that the interest rate is guaranteed not to change for the duration of the investment. This is not the case with savings accounts, which often have variable interest rates that can fluctuate with the market. 

  • FD offers flexibility in terms of tenure and amount

Fixed deposit offers flexibility in terms of tenure and amount. Investors can choose the tenure that suits their needs, and they can also choose to invest a small or large amount of money. The tenure for a fixed deposit can range from 2 years FD to 10 years, and the interest is paid out at maturity. The amount deposited in a fixed deposit account can be withdrawn before the end of the tenure, but this will attract a penalty.

  • FD provides higher returns than a savings account

FDs offer higher returns than a saving account and they are a low-risk investment option. When you deposit money in an FD, you essentially lend it to the bank for a fixed period. The bank, in turn, uses this money to lend to other customers or for its investments. Since the bank can use your money to earn more, it can pay you a higher rate of interest on your deposit.

  • FD offers the security of capital
  • FD allows premature withdrawal
  • FD is ideal for long-term investment

Summary

A fixed deposit account can be a good option if you are looking for a safe place to invest your money. Unlike a savings account, a fixed deposit account is not insured against loss. However, the chances of losing money in a fixed deposit account are very low, and you can earn a higher return on your investment than you would in a savings account.