What is Fixed Deposit?
FD
A Fixed Deposit is a lump-sum investment held with a bank or post office for a fixed tenure at a pre-agreed interest rate, which does not change even if market rates move during the term. It is one of the lowest-risk investment options in India.
Interest can be compounded quarterly, monthly, or annually and either paid out periodically or reinvested and paid at maturity, depending on the FD type. Premature withdrawal is usually allowed but attracts a penalty (typically 0.5–1% lower interest).
A 5-year tax-saving FD qualifies for Section 80C deduction (old tax regime only) but comes with a mandatory 5-year lock-in and no premature withdrawal option.
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