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Deposits
Fixed Deposits (FDs) have long been the go-to investment option for individuals looking for a safe and reliable way to grow their savings. With the introduction of callable and non-callable FDs, investors are equipped with more nuanced investment strategies tailored to their specific needs.
A Callable Fixed Deposit or normal FD offers investors the convenience of withdrawing a portion or the entirety of their funds prior to the set maturity date. Opting for early withdrawal, however, may attract a penalty from banks and NBFCs, which is a trade-off for the flexibility such deposits provide.
Callable Fixed Deposits stand out as a flexible investment option, balancing the trade-off between higher returns and liquidity management.
Non-callable Fixed Deposit represents a secure investment avenue where the funds are locked in until the end of the maturity period without the option for early withdrawal. This type of fixed deposit often demands a larger initial investment but offers more attractive interest rates in return, as the capital is guaranteed to remain untouched until maturity.
Non-callable Fixed Deposit offers the dual benefits of investment security and attractive returns, making it an ideal choice for investors seeking a stable growth path for their savings.
When deciding between callable and non-callable FDs, understanding the difference between callable and non-callable FD is pivotal to aligning your investment with your financial goals and risk preferences.
Non-callable FDs typically offer higher interest rates compared to callable FDs, as the funds are locked in for the duration of the deposit without the option for early withdrawal. Conversely, callable FDs may provide slightly lower interest rates due to their flexible withdrawal features, which can be a trade-off for having access to funds in unforeseen financial needs.
Callable FDs shine in terms of liquidity and flexibility, allowing investors to withdraw their funds before maturity if necessary, albeit with a penalty. Non-callable FDs lack this flexibility, as they are designed to secure the investment until the end of its term, offering no room for early withdrawal without facing significant restrictions.
Also Read: Top 5 reasons to open a Digital Fixed Deposit
Consider your investment goals and the timeframe over which you intend to achieve them. Non-callable FDs are well-suited for long-term goals where steady growth is preferred. In contrast, callable FDs may be more appropriate for short-term investment strategies where flexibility is a priority.
To conclude, when choosing between callable and non-callable FDs, consider your investment goals, time horizon, and liquidity needs. Non-callable FDs offer higher interest rates but lack liquidity, suitable for long-term goals. Callable FDs provide flexibility with lower interest rates, more suitable for short-term strategies and unforeseen financial needs.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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