Deep, deep dive
- Before you invest, check that your FD is insured by PIDM
- Check terms and conditions before agreeing to promotional rates
- Split your FD savings into a few smaller accounts
- Make sure you know the penalty of withdrawing funds before the end of the term (prematurely)
- Understand requirements to partially withdraw funds from your FD
Select an FD based on interest rates and tenure
The longer the tenure (or the length of time) that you keep your money in the FD account, the higher the interest rates. Still, you should choose a fixed deposit based on when you expect to need the money. If you are going to need the money in the next 3 months, don’t keep your money tied down for a year because you’ll have to pay a penalty for early withdrawals.
Early withdrawals can be costly so choose your tenure wisely
Always understand your bank’s conditions for early withdrawals in order to minimize your penalties. Be wary as these requirements vary from bank to bank
Split your FD into a few smaller accounts with different tenures
That way if you need to break your FD, you’ll hopefully have an FD that has just been renewed or you’ll minimize the loss of interest because it’s on a smaller portion of your savings.