Before investing in FD, find out about the interest rates offered by different banks. Experts say that interest rates should be compared in all banks.
FD Accounts Limit: Fixed deposits (FD) are very popular among those investors who do not want to take much risk. Elderly people especially like this option because they get more interest on it than common people. FD is an investment option that gives you safety, fixed returns and flexibility. But many times people have a question in their mind that how many FD accounts can they open or how many FD accounts should be opened.
If you also have this question in your mind, then the answer is that you can open as many FD accounts as you want. There is no limit for this. However, proper planning is required to manage multiple FDs. Let us tell you today many special things related to FD, which you should know.
Why Open Multiple FD Accounts?
Having more than one FD can provide many benefits:
Liquidity: Opening FDs with different maturity periods gives you regular access to funds.
Flexibility: You can allocate funds for different goals like education, travel or emergencies.
Higher Returns: Different banks offer different interest rates on FDs. Opening multiple FDs can give you maximum returns.
Tax Benefits: Some fixed deposits, such as tax-saving fixed deposits, are eligible for deduction under Section 80C of the Income Tax Act.
Keep these things in mind before opening multiple FDs:
1. Purpose of Investment
First ask yourself why you want to invest. If you are saving for a short term goal, invest in a shorter tenure FD. Similarly, for a long term objective, opt for a longer tenure FD.
2. Interest Rates and Tenure
Before investing in FD, find out about the interest rates offered by different banks. Experts say that interest rates should be compared in all banks. Even a small difference can have a big impact on your returns. Especially when investing a large amount. It is wise to invest in FDs of different tenures. By adopting this strategy, there is no need to break all FDs before maturity at the time of need.
3. Tax Implications on FD
The interest you earn on FD is taxable. If the interest is more than Rs 40,000 (Rs 50,000 for senior citizens) in a financial year, the bank deducts TDS (Tax Deducted at Source). Therefore, to avoid exceeding this limit, invest by planning properly.
4. Penalty on Premature Withdrawal
Banks impose a penalty on premature withdrawal. If you have many FDs, then in an emergency you can fulfill your need by breaking one of them. There will be no need to break all the FDs.
5. Nomination Facility
Make sure that you make a beneficiary as the nominee for each of your FDs. Doing so makes it easier for your family to claim the money in case of an unforeseen event.
How to Manage Multiple FDs?
Opening multiple FDs is easy, but it is important to manage them properly. Follow these methods to manage them:
- Maintain records on details like account number, deposit amount, interest rate and maturity date. You can easily do this work with the help of a spreadsheet or app.
- Do not keep the same maturity date for all FDs. Maturing them at different times will keep you liquidity.
- If you know that this money will not be needed even after maturity, then choose the option of auto renewal. In this way, the FD will be renewed automatically after maturity.
- When the FD matures, think whether you need this money or how much money is needed from it, take a decision accordingly. If you do not need the money at that time, then you can think of reinvesting in a new FD or any other investment option.
Should you open FDs in different banks?
Yes, opening FDs in different banks can be a good idea. Let us know the reason for this:
Deposit Insurance: Let us tell you that the Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits up to Rs 5 lakh per bank. Therefore, opening FDs in different banks provides more coverage.
Better Interest Rates: Different banks offer different interest rates. Opening FDs in multiple banks can help you get the best deal.
Reduced Risk: By opening FDs in different banks, you can reduce your risk. Suppose one of those banks faces a financial crisis in the future, then your risk will be less, because you have not invested the entire amount in that bank.
That is, as a bank customer, you can open as many FDs as you want. Just keep in mind that you choose their maturity period as per your financial goals and for safety reasons, do not invest your entire money in any one bank.
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