5 Things To Know Before You Start Investing In HDFC Bank Fixed Deposit

Our country has gone through a lot after demonetization in November 2016. The economy of India had become unstable. Organizations encountered losses, business investments proved fatal and the common person lost faith in the financial system.

In such an unstable economy, people were reluctant to invest their savings. Unclear about where to invest, they sought options, which were less risky. Every investment area was in a bad shape. Investment proved unfavourable in gold, silver and other precious metals as well as in real estate.

The safest and most favoured option for investors was bank fixed deposits (FD).

Bank FD rates are sure low, but assured. Since the risk is low, so are the returns. In India, many investors compromise on returns, resulting in the popularity of fixed deposits.

HDFC Bank offers an extensive list of fixed deposit schemes to cater every investor needs. HDFC bank FD rate depend of the tenure of FD and the type of investor; whether a regular or senior citizen. An essential quality of any investor is not directly invest, but to obtain more information about the investment.

Here is a list of 5 things that you should know before investing in HDFC bank fixed deposit.

1. Know How The Framework Of Fixed Deposit WorksOn the face of it, does not become any simpler than capitalising in a fixed deposit (FD). The bank promises to pay you a fixed rate of interest in return of not withdrawing the funds for a fixed period of time. The bank FD rate will be determined by the time for which your funds are parked with the bank. When your FD matures you get the principal along with interest earned. HDFC bank FD rates interest is very easy to calculate the amount you will get at the end of the tenure.
2. HDFC Bank Fixed Deposits Offer Assured Returns With Complete Safety Of Capital In the times when the market is unpredictable and you are searching for a low risk investment option. A fixed deposit is your safest bet. Very few avenues of investment offer safe investment with secure returns like a fixed deposit does. Bank FD rates vary from bank to bank. You can choose the bank that offers you the best rate and invest your funds accordingly.
   
   Higher HDFC bank FD rates are offered investors who deposit a lump sum of money in the bank for long-term.
3. You Can Enjoy The Flexibility To Invest In The Tenure Of Your Choice
   When you invest in bank fixed deposit take the benefit to decide the time you want to keep your funds invested. It can be as low as 7 to 8 days and as long as 10 years. FDs give the flexibility to deposit the amount of your choice. The bank FD rate will depend on how long you are interested to park your funds with the bank. The higher the tenure, higher will be the rate of return.
   
   The HDFC bank FD rates vary from 3.5% to 6%, based on your maturity period.
   
   It is advisable that you do not withdraw your money before the maturity period, otherwise you may have to incur penalty charges.
4. HDFC Fixed Deposits Give You The Advantage To Leverage Bank fixed deposits give you the benefit to take a loan by keeping your FD as collateral.
   
   Banks can also grant an overdraft against your deposit, if you do not want to break your FD prematurely. Nearly 80% to 90% of the FD value can be taken as loan. So before asking your bank for a loan or credit, take the benefit of FD as security.
   
   The interest on overdraft is charged usually at the rate of 2% higher than that of the HDFC bank FD rate. So, whatever your bank FD rate, you can avail on overdraft of just 2% higher than the rate. You can avail the overdraft facility by linking your saving account with your current account.
5. Save Tax By Investing In Tax Saving Fixed Deposit Schemes Keeping the need of every investor in mind, HDFC bank offers fixed deposit schemes that save tax. You can invest in the tax saving fixed deposit for a period of 5 years to save income tax under section 80C.
   
   Though the HDFC bank FD rate of interest earned in fixed deposit is subject to TDS, looking at the bigger picture, you can save on income tax. So if you invest a maximum of Rupees 1 lakh in a financial year, you can get a tax deduction of up to Rupees 1 lakh under section 80C.

Before starting to invest in fixed deposits, it is also important to know that the HDFC bank FD rates of interest is calculated on simple interest for deposits below six months in tenure. For deposits above six months the bank FD rates of interest is calculated using compound interest, compounded quarterly.

HDFC bank FD rates vary from time to time depending the bank’s term and conditions. Make sure that you check and compare the bank FD rates before investing in fixed deposit schemes.