Where to put your money?

There are certain factors you must consider before investing in either Bank FDs or Company FDs. Here are some major differences between the two.

Lower rate of interest


Higher compared to Bank

FDs (9%-16%)

Includes insurance cover up to Rs. 1 lakh by RBI

Not as safe as compared to Bank FDs as it is not backed by any Insurance Act

1% penalty if you withdraw bank FDs before maturity

2-3% penalty in case of premature withdrawal

Risk level is relatively low

Risk of default or failure to pay is comparatively higher

From 6 months to 3 years

May offer longer term

Returns are usually
50 - 100bps lower compared to AAA- rated companies’ FDs

Company FDs usually with lower credit rating can offer 3%-4% moreas compared to Bank FDs

If the interest amount exceeds Rs. 10,000, tax is deducted. You can avoid this tax by submitting form 15G (or form 15H for senior citizens).

Under Section 80C, you can also claim a tax deduction up to 1.5 lakh in tax-saving fixed deposits.

If the interest amount exceeds Rs. 5,000, tax is deducted

Common points:

Both Bank FDs and Fixed FDs accept long-term investments

They offer fixed rate of interest

Disclaimer: This infographic is intended for general information purposes only and should not be construed as investment or insurance or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.