A long-term fixed deposit (FD), also called FD for long term, is a secure savings option offered by banks where you invest a sum of money for a predetermined period, usually 5 to 10 years. During this time, your money earns interest at a fixed rate, which is generally higher compared to regular savings accounts. This steady growth helps you build a larger sum over time.
When you’re deciding on the tenure for your fixed deposit, you’ll come across various options, including short-term, medium-term and long-term. While the exact tenure can vary from bank to bank, the maximum duration for these deposits is usually around 10 years.
Long-term FDs can be a wise choice for individuals seeking stable returns and who are not looking for immediate access to their funds. As interest rates rise, choosing FD for long term becomes even more appealing.
What are the Best Long-term FD Rates in India?
When considering FD for long term, it’s important to choose a bank that offers competitive interest rates. These long-term FD rates are set by the bank, and are determined by the prevailing market conditions and the bank’s policies, and are subject to change.
Several top banks in India provide attractive interest rates for long-term FDs. Let’s take a look at some of the long-term FD rates in India offered by top banks:
|Bank||Interest Rate for General Citizens (p.a.)||Interest Rate for Senior Citizens (p.a.)|
|Bank of India||6.00%||6.50%|
The long-term FD rates provided in the table are applicable for domestic deposits below 2 crores with a tenure of 5-10 years.
Interest rates on long-term FDs can differ among banks, so it is essential to compare your options before investing. To find the latest long-term FD rates, reach out to your chosen bank or check their official website.
Long-term FD vs Short-term FD: What’s the Difference?
Here are some of the key differences between long-term FD and short-term FDthatyou should consider if you are planning to invest in FDs:
Tenure and Interest Rates:
- Short-term FDs span up to 12 months, while long-term FDs extend up to 10 years.
- Interest rates for short-term FDs are generally lower than long-term FDs, offering modest returns for immediate goals.
Ideal for Different Goals:
- Short-term FDs suit immediate needs like travel or purchasing appliances.
- Long-term FDs are better aligned with long-lasting goals such as retirement planning or funding education.
Lock-in Period and Returns:
- Short-term FDs require a shorter lock-in period, providing quicker access to funds.
- Long-term FDs, with extended tenures, offer the benefit of compounding and higher interest rates.
Tax and Liquidity Considerations:
- Interest earned on both FD types is taxable as per Income Tax Law.
- Premature withdrawal of FDs might incur penalties, reducing potential returns.
What are the Advantages of Long-term FD?
Long-term FDs offer a host of benefits that make them a preferred choice for investors seeking stable growth:
- FD for long term, typically offers higher interest rates compared to short-term or mid-term deposits.
- Long-term FDs can serve as collateral for loans at lower interest rates than market rates. This flexibility offers a cost-effective borrowing option.
- Longer tenure FDs like 5 to 10 years provide liquidity during emergencies. They can act as a financial safety net when unexpected expenses arise.
- Senior citizens stand to gain even more from FD for long term, as they often receive higher interest rates. This makes it an ideal investment for retirees looking to enhance their income.
- Banks guarantee returns on fixed deposits, resulting in minimal risk for investors. This assurance makes long-term FDs a secure way to grow your savings.
How to Use the Long-Term FD Calculator?
The interest earned on FD for long term is calculated based on the initial deposit, the fixed interest rate, and the chosen tenure.
You can use the online FD calculator offered by Max Life to easily calculate the maturity amount and total interest earned on your FD for long term.
Here’s how to use the calculator to calculate your returns:
- Enter the investment amount, interest rate, and tenure into the calculator.
- The calculator will show you the total investment, total interest earned, maturity amount, and the interest earned on your FD for long term.
Calculating interest on FD for long term ensures that you know exactly how much your investment will grow by the time it matures. Also, keep in mind that FDs usually have a lock-in period during which you cannot withdraw your funds without incurring a penalty.
FD for long term offers a secure path to grow your savings over time, making it a wise choice for patient investors with lasting financial goals. Whether for retirement, securing a child’s future, or building a financial cushion, a long-term FD provides stable growth and assured returns. To make an informed decision, compare rates across banks and consider your financial goals before locking in your money in an FD for long term.