Personal Finance: These 5 benefits are available with interest on making Fixed Deposit, know details

Personal Finance: These 5 benefits are available with interest on making Fixed Deposit, know details

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new Delhi. Fixed Deposit is still considered a better means of investment in India. There is less risk on investment. Interest is also available. However, due to higher returns, many people recommend investing in mutual funds or other places instead of getting FDs.

However, if you want a guaranteed return on your money, then FD is a better option. In this not only interest is available but there are many benefits together. You can avail loan or overdraft facility against FD. Insurance cover is also available in this. Know and what are the benefits.

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Loan or overdraft facility

Many banks also offer overdraft facility on FD basis. FD is like a guarantee. This means that if you are unable to repay the loan, the loan amount will be covered by your FD. If you compare FD with any other investment, then also keep in mind that you can get loan against FD.

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insurance cover

If you have made an FD in any bank, then you get the insurance cover of Deposit Insurance and Credit Guarantee Corporation (DICGC) on it. If your bank defaults or becomes insolvent, then you will get up to Rs 5 lakh under this insurance cover. This will include both principal and interest. This means that you will definitely get a guarantee. There will also be a guarantee of getting back up to Rs 5 lakh.

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Benefits of free life insurance

There are many such banks, which offer the additional benefit of free life insurance on getting an FD. Banks give such offer so that they can attract more and more people towards FD. Under this, banks offer life insurance equivalent to the FD amount to their customers. There is also an age limit in this.

Benefits of tax will also be available

If you make an FD for 5 years or more, then you can claim tax exemption on it under Section 80C of the Income Tax Act, 1961. Under this, you can take tax exemption up to Rs 1.5 lakh in a year. However, if you make an FD of less than 5 years, then you will have to pay tax. If the interest received from all the banks in a year exceeds 40 thousand rupees, then it will also be taxed.

Guaranteed Returns

The most important thing about FD is that you get guaranteed returns in it. This means that if you are planning after 5 years or 10 years or any number of years then in FD it is known that how much money you will get on maturity because FD gives fixed return. At the same time, returns in investments like mutual funds, NPS, ELLS vary every year and depend on the movement of the stock market.

Tags: Fixed deposits, Interest Rates, Investment, Personal finance, Saving

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