A fixed deposit is one of the most popular investment options. Both young and old investors prefer investing their funds for a short and long term period in an FD. A fixed deposit provides guaranteed and fixed returns for the duration of the deposit and in return, the funds are available only when the deposit matures.
With digital banking getting more popular, people are preferring to open a fixed deposit online as compared to opening them offline by visiting a bank branch. Most banks now have mobile banking in place which allows the user to make transactions from their mobile phones. These mobile banking apps provide almost all the services that internet banking provides which means it is even possible to open fixed deposits online through the mobile banking application.
Opening an FD online has a lot of advantages which trump opening the deposit offline in a branch.
Here are the benefits of investing in fixed deposit online:
Opening an FD offline means you need to visit the bank branch, fill up the fixed deposit form, submit your KYC documents in case you are opening it in a bank where you don’t have an account. However, using internet or mobile banking, you can open a fixed deposit any time of the day, even outside of banking hours since these systems work 24×7.
You can choose to renew your fixed deposit online at the time of booking the fixed deposit itself. The bank will automatically renew the fixed deposit on maturity. In an offline fixed deposit, you need to fill up the renewal form and submit it to the bank. These formalities are not required when you open an FD online.
Submission of tax forms:
If your income does not breach the no tax limit, you can submit form 15G or form 15H to the bank and they will not deduct tax on the interest income on fixed deposit. If your total income from a fixed deposit does not exceed Rs. 40,000, the bank is not supposed to deduct tax as per the recent budget rules. However, using internet banking, you can submit form 15G/15H online at the time of booking the fixed deposit which avoids physical paperwork.
Liquidating a fixed deposit prematurely is extremely simple online. You can do it through internet banking in a matter of a few clicks. If you liquidate a fixed deposit before its due date, a penalty of 1% is charged and it is reduced from the interest already accrued to the account.
Sweep in facility:
When you book a fixed deposit online, you can also opt for a sweep in facility. This means if your bank balance exceeds a particular sum, the excess will be credited to a fixed deposit account. This balance will earn interest on it for the period it is swept in. Once you need to make a big payment, the funds will be swept out of the fixed deposit. This helps to earn additional income on your savings account balance.
Neha Sharma is a finance student who loves to write in her free time. She has spent a considerable amount of time researching about fixed deposit. Through her work, she has explained how online fixed deposits are useful