Why do Indians prefer Fixed Deposits?

Fixed Deposits are a preferred investment choice amongst Indians as they are considered safe, reliable, and provide guaranteed returns. Apart from being safe and reliable, they are easy to understand. All Indian banks offer FDs. 

You can deposit money in an FD for a specific period and earn interest on the amount deposited. They are great for those who wish to fulfil their financial goals within a particular time frame, making it easier to estimate returns at maturity. Here are other reasons why Indians prefer FDs:

Reasonably liquid 

FDs offer investors a reasonably liquid investment. They can withdraw their money before the maturity date of the deposit. However, premature withdrawal of FD comes with a penalty that changes between banks. The disadvantage of premature withdrawal is primarily a reduction in the interest rate offered on the deposit. 

Monthly interest payouts

Fixed Deposit gives investors an option of monthly interest payouts. This is advantageous for those who need a regular source of income. The interest payout can get credited directly to the investor’s account, which helps them have a hassle-free investment experience. 

Loans availability 

Investors can apply for Loans against their FD. The Loan amount is mostly a percentage of the FD amount deposited. The interest rate charged on these Loans is lower than what is set on regular Loans. Hence, it is an attractive option for investors who require quick funds. 

Multiple FD tenure options

FDs offer investors several tenure options, ranging from seven days to 10 years. Investors can choose their deposit tenure that fits their financial goals and needs. 

Unaffected by market turmoil 

FDs are unaffected by market turmoil and fluctuations. The interest rate on a Fixed Deposit Account remains the same throughout the deposit tenure, offering investors a stable investment choice. 

Online FD application and renewal 

FDs can be applied for and renewed fromyour home. Online applications and renewals of FDs provide a hassle-free and easy experience for investors who wish to save their time and effort. 

Guaranteed returns 

The most crucial reason FDs are preferable is because they offer guaranteed returns. The FD interest rates are fixed at the investment time and remain the same throughout the deposit tenure. This ensures that the investor knows the exact returns they will get at the end of their deposit tenure. 


Indians invest in FDs as they offer several benefits and services mentioned. Additionally, the ease of access and convenience of opening an FD make it a preferred investment option for those seeking stability and safety. However, FDs might only sometimes be the best investment option. Investors should also diversify their portfolios to achieve their financial goals.