What is the meaning of Term Deposit? These are the 8 types of TD

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In banking terms, the meaning of term deposit is the safest investment scheme with a fixed duration and amount. For example, if you have an amount of Rs 1 lakh and want to invest in a term deposit scheme, the bank will give you the option to invest in a term deposit with a minimum of 7 days and a maximum of 10 years. You must choose a favorable time period from these minimum 7 days and maximum 10 years, and your bank will provide you with an interest rate based on their card rates for that time period. Every bank has its own rate of interest that it offers to its customers. For example, if you invest Rs. 1 lakh for a year and your bank offers a 7% interest rate, you will receive Rs. 7186.00 as an estimated return on your investment. 

meaning of term deposit

> To Use this Term Deposit Calculator click here : PNB Deposit Calculator

Types of Term Deposits

  • Cumulative and Non-Cumulative deposits
  • Fixed and Recurring Term Deposits
  • Sweep-in facility term deposit
  • Short-term and Long-term deposits
  • Senior Citizen term deposits
  • Special deposit schemes for children
  • Post Office Time Deposit
  • Tax-saver term deposits

Cumulative and Non-Cumulative deposits

In a cumulative term deposit scheme, you get the interest amount after the maturity of the term deposit. For example, if you made an FD for 1 year, then after 1 year you got the principal invested and earned interest on that principal amount, so you got the cumulative amount after maturity.

In a non-cumulative term deposit scheme, you get the interest amount whenever you want, like after every month, quarter, or year. For example, if you made an FD for 1 year and opted out of interest payments on every month’s end, then every month you would receive the interest amount in your savings account, and after the maturity period, you would receive the original invested amount.

Fixed and Recurring Term Deposits

In a fixed deposit scheme, a particular sum of money is invested for a fixed duration, but in a recurring deposit scheme, a fixed sum of money is invested at a fixed interval. For example, if you want to invest Rs. 1 lakh in a fixed deposit, you have to select a fixed duration that is minimum 7 days or maximum 10 years. If you want to invest the same amount but in multiples of Rs. 10,000, you have to invest Rs. 10,000 for 10 months regularly without any skip.

Sweep-in facility term deposit

In sweep-in, you can set an upper limit on your savings account. Any amount beyond that limit gets converted into a fixed deposit. If the savings account suffers a loss, the funds will be withdrawn from the fixed deposit, leaving only the loss of interest on the money drained out. Sweep-in fixed deposits usually offer higher interest rates than a normal savings account.

Short-term and Long-term deposits

A short term deposit has a lock-in period ranging from 1 to 12 months and a Long term deposits have a lock-in period ranging from 1 to 10 years.

Senior Citizen term deposits

In the Senior Citizen Term Deposit Scheme, you will get 0.50% extra interest on the card rate if your age is above 60 years. Most banks will give their senior citizens an additional 0.50% in interest. 

Special deposit schemes for children

An example of a Special deposit scheme is Sukanya Samridhi Accounts for girl child.

Post Office Time Deposit

Post offices also provide term deposit schemes for 1 year, 2 years, 3 years, and 5 years. In these schemes, interest is payable annually but calculated quarterly. Anyone can open a term deposit account with the post office with a minimum amount of Rs. 1000 and in multiples of Rs. 100 with no maximum limit. The post office offers the following interest rates: 

meaning of term deposit

Tax-saver term deposits

Tax-saver deposits are eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. These tax-saving term deposits have a lock-in period of 5 years, and any income from interest received above Rs 40,000 is taxable.

Check our latest Article on Fixed Deposit : Get 7% Rate of Interest on Fixed Deposit

Check out All Banks Interest Rates on Term Deposit

Click on Bank name to check out the latest interest rates.

  1. State Bank of India
  2. Punjab National Bank
  3. Bank of Baroda
  4. Canara Bank
  5. Union Bank of India
  6. Bank of India
  7. Indian Bank
  8. Central Bank of India
  9. Indian Overseas Bank
  10. UCO Bank
  11. Bank of Maharashtra
  12. Punjab & Sind Bank
  13. HDFC Bank
  14. Kotak Mahindra Bank
  15. Axis Bank
  16. ICICI Bank
  17. IndusInd Bank

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