Know about fixed deposits | Fusion - WeRIndia

Many people prefer to have fixed deposits as it is considered as safe fixed income instrument. It is a very popular choice investment for senior citizens and individuals with low risk profile. There is a concept called overdrafting. In this, if you have a fixed deposit of Rs 1 lakh, the bank may allow you to give you 85 percent (85,000) as overdraft on FD.

After booking fixed deposits in bank, one might need money for emergency for a short period. In this case, overdraft facility or OD is a better option when compared to a personal loan or gold loan. This is because it is not a good option to break the fixed deposit as it can cut interest rates.

1) The interest rate on overdraft is usually higher than bank fixed deposit rates. The overdraft rate is different with different banks and is also dependent on the tenure of the overdraft.

2) The maximum amount of the overdraft amount will be 80-95 per cent of the fixed deposit amount.

3) Tenure of the loan depends on the maturity of the fixed deposits. If one fails to pay the amount, it will be adjusted towards the fixed deposit.

4) An overdraft can be closed without any pre-payment charges.

5) There is no much paper work and eligibility involved as compared to availing personal loan.

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