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24 Jun 2022
What is a term deposit account?
How term deposits work
Term deposit - The crucial facts you need to know
Term deposit account features & benefits
Types of term deposits
The Baroda Tax Savings Term Deposit Account
Bank of Baroda term deposits
The Baroda SUVIDHA Flexible Fixed Deposit Scheme
The Capital Gain Account Scheme, 1988
How to open a Bank of Baroda Term Deposit?
A bank account is the most crucial instrument that allows you to save money. You can easily deposit and withdraw funds at your convenience and grow your savings steadily. While banks offer interest on your savings account deposits, they also offer a host of investment facilities that allow you to earn better interest rates and grow your corpus significantly. One such facility is known as a term deposit. Let us understand what term deposits are and how to assess their salient features, exceptional benefits, and various types. Read on.
A term deposit account, also known as a fixed deposit account, is a type of fixed-term Investment avenue. You can use this account to deposit money into a financial institution like a bank and earn interest on your deposits. Such an investment typically comes with a fixed maturity date which ranges from one week to several years, and the interest rate you earn depends on your chosen investment term or tenure. Based on the type of term deposit you invest in; you may choose to receive the interest payment periodically or at the end of the investment term.
Unlike a savings account, you cannot access funds in your term deposit account as and when you please. Instead, you must be willing to lock away your funds for the term and can withdraw them only when the deposit matures. That said, you may prematurely withdraw your term deposit, but the bank may levy a premature withdrawal penalty, which could be a specific percentage of the sums deposited.
Term deposits have always remained a popular investment avenue for investors due to their various attributes. If you choose to invest in a term deposit, here are some facts you should be aware of to prepare yourself for the investment.
Having explained term deposit meaning and facts, let us now analyse unique features and benefits of term deposit.
Besides knowing what are term deposits and their salient features, you should be aware of the various types of deposits. They include the following:
A cumulative deposit is a type of term deposit that is ideal for investors who wish to achieve the goal of corpus creation. If you opt for the cumulative deposit option, the bank repays your principal amount and the accumulated interest as a lump sum when your term deposit matures. Also, cumulative deposits lead to higher interest and return rates since the returns accrued are reinvested.
Investors who wish to generate extra income over their existing income sources can opt for the non-cumulative term deposit that pays interest periodically. If you select this option, the bank deposits the interest income into your account on a monthly, quarterly, semi-annual or annual basis, depending on your chosen payment tenure.
Tax-saver term deposits are ideal for investors who wish to make the most of tax deduction benefits offered under Section 80C of the Income Tax Act of India, 1961. Under this facility, you can avail of tax deductions of up to INR 150,000 on your term deposit accounts. Note that your tax-saver term deposits come with a fixed lock-in period of 5 years, and you get tax exemptions on interest income up to INR 40,000 per annum.
Banks provide a facility that enables their account holders to set an upper limit on their savings bank accounts. If you deposit more funds than the upper limit you’ve set, the bank automatically converts the extra funds into a term deposit and provides interest on it. This is known as a sweep-in facility term deposit. If your savings account faces any deficit, you can withdraw funds from the term deposit. In such a case, you would only lose interest on the funds you sweep in.
If you are above the age of 60 years, you can opt for the senior citizen citizens term deposit. This facility allows you to earn a slightly higher interest rate (usually 0.50% more) than that offered to other term deposit account holders.
A recurring deposit is also a type of term deposit under which you must deposit a fixed sum in a recurring account at fixed intervals. Like with most other term deposit accounts, you can choose your preferred investment duration, with one year being the minimum term for such deposits. The bank pays you interest when your deposit matures.
Bank of Baroda offers an extensive range of term deposit accounts to its wide customer base. As a Bank of Baroda customer, you can opt for short and long term deposits, lasting up to a year and over ten years, respectively. Here is a look at three of the most popular Bank of Baroda term deposit accounts.
Now you can open Bank of Baroda term deposit accounts from the comfort of your home. Simply sign up for our net banking services or download the Bank of Baroda mobile app to get started. Get competitive Bank of Baroda term deposit rates and reach out to our representatives for assistance on the best type of term deposit suited to your needs. You may also contact us on our toll-free number 1800 5700 or walk into your nearest Bank of Baroda branch for more details.
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The very first bank account opened by most people is a Savings Account. Now, do you know that your savings account can help you earn interest on the money that you deposit in it? The rate of interest that you earn on your savings differs from one bank to the other. There are also several other ways to earn savings account returns. However, not many people are able to utilize the maximum potential of a savings account as they do not possess the right information. To help you make the most out of your savings account, here are 6 Savings Account tips:
Are you looking for a way to manage your daily high-value business transactions? Do you want access to extra cash to fund unforeseen financial crises? If yes, then you can opt for a Current Account. Unlike a Savings Account, these accounts come with high-value, unlimited transactions, and you can access them as often as you like, to manage your business needs. Plus, you can enjoy the overdraft facility that lets you borrow higher amounts than your balance. One of the best current accounts you can open in India is the Bank of Baroda Advantage Current Account. In this article, we assess the Bank of Baroda current account benefits and features.
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