Sometimes it happens that you are all set to invest your savings into a fixed deposit scheme, but unable to do because of the selection of the potential service provider.
Yes, it may happen because when it comes to the service providers, you may ponder over whom to select between a company FD and a bank FD scheme.
This write-up will help clear your doubts and provide some vital insights into a bank as well as a company fixed deposit plan. Shall we begin? Let’s go!
Company fixed deposit schemes – Features and benefits
Here are some of the vital features and benefits of a company fixed deposit plan:
- A company fixed deposit is an FD that is provided by companies and financial institutions such as non-banking finance companies (NBFCs) and more.
- These FD schemes work as standard FDs, but yield higher interest rates.
- Unlike some risk-prone investment schemes such as mutual funds, stocks, equities, bonds and more, FD plans’ profits are not affected by market conditions. As a result, they are known as a low-risk investment with a sure-shot ROI.
- An FD plan may be flexible which means that you may be entitled to opt for a tenor or maturity terms as per your own desire.
- Depending on the type of service provider that you avail, fixed deposit accounts could be liquidated when you need some urgent money.
- FD accounts with a company let you do premature withdrawals without prohibitions.
- You can utilize the FD amount for any purpose best known to you such as buying an asset, financing a holiday and beyond.
- The facility of cumulative as well as non-cumulative interest payouts is available.
- A company FD account is safe as it’s authenticated by credit agencies such as CRISIL and ICRA. You are free to avail one as per a higher rating.
Bank fixed deposit schemes – Features and benefits
Here are some of the essential features and benefits of a bank fixed deposit scheme:
- These types of fixed deposit plans are offered by registered state or private banks.
- The rate of interest on bank’s FDs is lower as they provide an enhanced level of security to an account. The bank’s FDs are secured by the Reserve Bank of India up to Rs.1 lakh.
- Banks don’t have flexible rules and terms and make premature withdrawal tricky.
- Banks’ FDs offer a low ratio of liquidity as compared to company’s FDs.
- For a premature withdrawal of your FDs, you may have to put in some hefty penalty.
- You can get some extra features if you have a savings account with a bank you want to open an FD account with.
- Even banks’ fixed deposits have cumulative as well as a non-cumulative type of payouts.
How to choose between a bank and a company FD?
The selection of a fixed deposit service provider is impacted by your preferences and what you want to gain from your fixed deposit scheme after its maturity.
If gaining a guaranteed higher amount of interest payout without any risk is your motto, you could go for a fixed deposit plan offered by a company.
If you want to avail RBI based surety of your FD accounts more than your interest rates, you could go for a bank plan.
The Bottom Line
Both bank FDs and company fixed deposits are good in their own ways, and its selection depends on what you are willing to achieve with it. Now that you are aware of the features of a company as well as bank FD, it would be easier to make a choice! Best of luck!