Have you been wondering what a fixed deposit is? Likewise, do you wish to learn more about its features, benefits, existing interest rates, and so on?
Fortunately, this article covers all these aspects and a lot more. Keep reading for a better understanding.
Yes, there are several financial instruments available in the market. Among them, the fixed deposit has become the preferred option for many.
They are presently being offered by:
Banks, and
Non-banking financial companies (NBFC)
This investment instrument helps you to save money for your future. Under the mechanism of having a fixed deposit or FD, you have the freedom to invest a significant amount of money. It involves two things:
You invest a lump sum amount in your bank for a fixed tenure, and
Earn interest for said tenure at an agreed rate of interest.
When the tenure ends at a pre-decided period, it brings two important things for you:
You get back the money you invested initially, and
An additional compounded interest on this amount provided you have not decided to get your interest in a monthly mode.
SBI enjoys great credibility and authenticity. It has served uncountable customers with its service as well as lucrative interest. You also have the convenience of:
Earning your interest along with your principal amount, and
Getting the interest credited to your given bank account.
SBI is aware of the varied needs of its customers. On account of this, they offer an option to receive the monthly interest. This means you stand to get your:
Monthly payouts for the applicable periodic payouts you have volunteered to receive, and
The interest is calculated on your principal amount, and you can obtain the same periodically.
Just bear in mind one thing if you plan to opt for FD. The interest that you earn, periodically, compounded or otherwise, comes within the purview of tax. The money that you earn as interest is added to your total income.
After that, you will be taxed at prevailing tax slab rates on your entire income. You are under legal compulsion to declare this in your tax return under the heading 'Income from Other Sources.'
There is a reason why you need to do so. The interest you earn on an FD is taxable. The said interest amount is added to your total income. Thereafter, the applicable tax slab rates are applied to your entire income.
You can opt for a tax-saving fixed deposit (FD) account. It is essentially a fixed deposit account and can easily claim a tax deduction under Section 80C of the Income Tax Act, 1961. The current upper limit of this claim has been fixed at a maximum of Rs. 1.5 lakh per annum.
SBI Fixed Deposit Features
Yes, the SBI fixed deposits attract many to invest without second thoughts. This is partly because it offers them numerous features that can not be found elsewhere.
It gives you assured returns. This is a wonderful parameter for people who do not look for great returns but want guaranteed returns in the form of interest.
It offers flexible tenures. Today, these fixed deposits cater to the needs of varied investors. For instance, some customers wish to park their idle funds in an instrument for a short period. At the same time, you yearn to receive regular income through interest.
This is where fixed deposits meet their parameters. For example, you will receive agreed interest for the term you want to earmark your funds in the form of FD.
Some customers prefer to procure loans against their movable properties. The fixed deposit offered by SBI allows them to avail this facility. You can enjoy this facility to take loans against your FD.
When you opt for a fixed deposit, it puts you in an advantageous position. There are several SBI fixed deposits schemes available. They cover tenures as small as 7 days to as big as 10 years.
All you need to do is to make a minimum deposit of Rs. 1000. Once done, depending upon your preferences and choices, you can choose from repayment options of:
Monthly.
Quarterly, and
Annually.
Some of the noteworthy features of these schemes include:
You can make a beginning to invest in FD with a mere Rs.1,000.
Unlike other financial instruments, you can make as much investment in fixed deposits as you want.
There is an additional interest rate of 0.50% especially dedicated to senior citizens.
Get FD done with interest rates varying from 2.90% p.a. to 5.40% p.a.
Opt for the highest term deposit tenure to enjoy interest rates at 5.40% p.a.
You can meet your emergency financial needs by opting for premature withdrawal.
Enjoy an overdraft or loan up to 90% of your deposit value.
Take advantage of the overdraft limit from 25,000 to Rs.5 crore.
Go for automatic renewal FD, and don’t miss your interest anytime!
Convert your interest payout frequency to a more convenient cumulative payout at any point.
If you take a loan against FD, you will be required to pay only 1% more than the FD rate.
Pay TDS or Tax Deducted at Source at prevailing rates as stipulated under the Income Tax Act, 1961.
Avail easy nomination process. There are fewer steps to comply with. It will secure your loved ones in case of your unfortunate death.
Liquify your FD funds and get them transferred to any of your linked accounts.
Benefits of using SBI FD Calculator
If you are spending a very fast-paced lifestyle or otherwise, you will find the SBI FD Calculator immensely beneficial.
Savings in time: it will save your time as you can find all your requirements fulfilled right from the comfort of your home!
Likewise, it will enable you to do proper planning for all your:
Long-term and
Short-term investment goals.
The calculator will throw away results in just a few seconds. You do not have to accept these results with a pinch of salt as they are very accurate. This happens because a lot of scientific thinking goes into coming up with such a scientific and amazing calculator.
All crucial factors are taken into consideration while developing the calculator. This way, it addresses all your concerns and requirements. You can always count on the findings of the calculator to a given FD investment scenario.
It offers you to choose from a plethora of investment options. In a way, it offers you much-needed assistance in arriving at logical conclusions.
Ease in using: You do not need to possess any rocket-science know-how to use them. The process is straightforward. All you need is to enter the details and see the results instantly.
Get all your FD interest computations done quickly: FD’s interest computation is an intricate affair. By taking the help of the calculator, you can ease the process and get all computations in seconds.
Precise and accurate data: You make your decision based on figures generated by a calculator. Any wrong figure can lead to adverse financial repercussions.
This is where the SBI FD Calculator scores the brownie points! It provides you with precise, accurate, and correct data. The margin of error is next to none.
Gives you an option to make scrutiny: Often, when you decide to make an investment choice, it is based on some sound yardsticks. The financial soundness of the alternative holds the key to making a decision. This is exactly where they produce devastating financial consequences.
The SBI FD Calculator in such situations can serve as a blessing-in-disguise for you. It empowers you to make the appropriate correlation of the estimates to different FD options so that you can choose the best option.
Get a preview of future outcomes: This calculator is devised in a manner that you can make a future estimation of a specific FD scheme. In a sense, it allows you to make an informed decision in many ways. For example, you can design your FD ventures according to your monetary objectives.
The calculator has been within reach of fingertips: This calculator is credited for giving the earlier practice of using a physical calculator. Presently, you can use it on the internet in a digital format.SBI Fixed Deposit Interest Rates
To eat a major slice of the huge FD investors, SBI is offering different interest rates on their innumerable fixed deposit schemes.
Tenure | Non-senior Citizen FD Rates | Senior Citizen FD Rates |
7 days to 45 days | 2.90% | 3.40% |
46 days to 179 days | 3.90% | 4.40% |
180 days to 210 days | 4.40% | 4.90% |
211 days to 364 days | 4.40% | 4.90%
|
1 year to 1 year 364 days | 5.10%
| 5.60% |
2 years to 2 years 364 days | 5.10% | 5.60% |
3 years to 4 years 364 days | 5.30% | 5.80% |
5 years to 10 years | 5.40% | 6.20% |
Which FD option is the best will depend on a lot of factors like your preferences, amount to invest, tenure of the investment, and so on.
Nevertheless, you can narrow down the criteria in terms of:
- Tenures.
- Applicable interest rates and
- Any specific facility for a special category of customers.
For example, if you are a senior citizen or have one in your family, you can choose this one yardstick to determine the option you wish to go for.
Presently, SBI has certain options for this specialised category of customers. They can opt for tenure from 1 year and 10 years and earn 6.20% p.a. The availability of an additional interest of 0.50% than the regular rate has made it hugely popular among retired people.
Frequently Asked Question
Q1. How is SBI FD interest calculated?
Well, you do not have to be a great mathematician to do the interest calculation; the procedure is very simple and straightforward. Have these 3 pieces of information:
- Principal (P)
- Rate of interest ( R ) and
- The period (P).
Multiply P x Rx T. Divide the resultant figure by 100. Therefore, the calculation can be done by P x Rx T/100.
Q2. Is SBI fixed deposit compound interest?
It is very rare for banks to provide continuous compound interest on fixed deposits. SBI compounds your earned interest compounded quarterly for the fixed deposit.
However, the applicable interest rates change drastically for any amount of Rs 1 crore and above. Normally, the interest rate goes below the regular interest rate in such a situation.
Q3. Can I add a nominee to my SBI FD account?
Like most other banks, even SBI gives the facility to add a nomination. This is extremely helpful in case the depositor in question meets with an unexpected death. You can opt for this in your capacity or as a representative capacity. This is applicable for all accounts like:
Single/joint accounts.
Accounts of a sole proprietary
Currently, SBI is giving you a chance to appoint a nominee to the SBI account online.
Q4. What is the maximum deposit that can be made towards an FD account?
Well, there is no upper ceiling when it comes to how much you can invest in FD. The only criteria are the money you invest ought to be legitimate in legal parlance.
Of course, if you invest in FD to avail of specific Income Tax rebates provided under 80C, the upper threshold is limited to Rs 1.5 lakh a year.
Q5. Does SBI provide a premature withdrawal facility for its FD account?
Yes, you can! This comes as a great relief to many investors who are apprehensive about the future turn of events!
Of course, you will part with some money as penal charges. For instance, for term deposits less than Rs. 5 lakh, the applicable penal charges have been fixed at 0.50%. Similarly, if the term deposits in question are above Rs. 5 lakh, the penal interest stands at 1%.
Q6. What is the highest FD rate for the State Bank of India SBI?
SBI is the largest public sector bank offering a whopping 5.40% interest rate for the general category. Likewise, it is giving away 6.20% to senior citizens to tackle the present recessionary trend in the economy.
The presence of such staggering interest rates is luring a wide section of the seniors to opt for this option. It gives better security in terms of dealing with turbulent days ahead.