Fixed Deposit (FD)
Definition
A deposit that locks a sum with a bank for a fixed term at a pre-agreed interest rate.A fixed deposit is a deposit account where a sum is placed with a bank or NBFC for a fixed tenure at an interest rate agreed upfront. Interest can be paid out periodically (non-cumulative) or compounded and paid at maturity (cumulative). FDs offer predictable returns but lower liquidity than a savings account; premature withdrawal usually attracts a penalty.
Related guides
Related terms
- Recurring Deposit (RD) — A deposit where a fixed amount is paid in every month for a set term at a fixed rate.
- Compound Interest — Interest calculated on both the principal and previously accumulated interest.
- TDS (Tax Deducted at Source) — Income tax that a payer deducts before paying interest or other income, and deposits with the government.
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