Fixed Deposit is usually kept for a fixed period. This period can be for different periods like 1 month, 3 months, 6 months, 1 year, and more than 1 year. In contrast to fixed deposits, financial institutions pay a fixed rate of interest or profit to the depositor. This deposit is sometimes called a time deposit. Money from this account cannot be withdrawn before the specified period. If the deposit is withdrawn before the specified period, the investor is given no interest or in some cases very low rate of interest. The advantages and disadvantages of Fixed Deposit are discussed below-
Advantages of Fixed Deposits:
1. Higher interest/profit than a normal savings account.
2. Even if the deposit rate of a bank or financial institution decreases after making a fixed deposit, it will not have any impact as a going concern.
3. No hassle of maintenance charges.
4. Facility of loan/overdraft against the deposit.
5. Golden opportunity to accept credit cards against the deposit.
6. Early encashment can be done in case of emergency.
7. Unlike fixed deposits, banks or financial institutions sometimes allow customers to enjoy various special benefits.
Disadvantages of Fixed Deposit:
1. The account cannot be opened below the amount fixed by the bank.
2. Penalty has to be paid in case of early encashment depending on the bank or financial institution.
3. If the account is closed before the maturity (Early encashment) the desired rate of interest/profit is not available.
4. Unlike savings accounts, deposits and withdrawals cannot be made at will.
5. If there is a lien against the deposit, the deposit is not refundable until it is settled.
6. Even if the rate of deposit in a bank or financial institution increases after making a fixed deposit, it will not have any effect as an ongoing one.
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📞Call: +88 0258157287
+88 01723249951
📧 Email: info@mfmsbd.com
More details on our website:-
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