Even though investments are often portrayed as something that can be risky, fixed deposits are as safe as operating a savings account. Additionally, fixed deposit accounts help you grow your wealth, instead of just keeping your money safe. Following are some reasons why a fixed deposit is better than an ordinary savings account:
- Your wealth increases
Even when you have accumulated a large amount of savings in your bank account, the interest earned on the same is minimal. However, if you put that savings to use and invest in an FD account, the considerable interest on the sum deposited will help your wealth grow over time.
- Interest rates are high
In a savings account, the money that you save earns you minimal interest. However, if you keep the same amount of money in a fixed deposit account, you tend to earn a lot more from your initial deposit. This is because FD account interest rates are substantially higher than ordinary savings account rates.
- Meet your financial goals
If you keep money in a savings account, the money remains stagnant. However, in the case of a fixed deposit, your money accrues interest. If you are saving money to purchase a new car or some other product, a fixed deposit account will help you reach your target sooner as opposed to a savings account.
- Senior citizen benefits
If you are above 60 years old, you are liable to receive additional interest on the deposit. As per the norm, senior citizens receive 0.5 per cent more interest than the prescribed rate. If you have substantial deposits in your fixed deposits, this additional half percentage will mean a large sum of money.
- Easy access to credit cards
Fixed deposit accounts allow you to link a credit card to the account as well. Additionally, companies charge less for credit cards that are connected with fixed deposits.
- Taking a loan with the FD as collateral
If you want to build your credit rating, you can take a loan against your fixed deposit. In such a case, you would not need to provide any other collateral for this loan.
Therefore, the next time you think about opening an account in the bank, go for a fixed deposit account.
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