FD vs Special FD, Know Which is Better Option For You

FD vs special FD: Fixed deposits (FDs) are considered one of the most dependable investment choices in India. They are particularly favored by retirees and those with a conservative approach to risk. FDs provide secure returns, safeguard capital, and ensure a steady income.

In recent years, banks have increasingly introduced “special FD” schemes in addition to the standard FDs. Schemes like SBI Amrit Varsha and Utsav FDs offer slightly elevated interest rates compared to regular FDs, making them appealing to investors looking for improved returns.

What are special FD schemes?

Alongside regular FDs, numerous banks now provide special FD schemes with fixed tenures. Unlike regular FDs, which can have flexible terms of 1 year, 3 years, or 5 years, these special schemes often feature specific durations such as 444 days, 555 days, or 700 days.

Banks typically introduce these schemes to draw in larger deposits for a designated timeframe, offering slightly higher interest rates than those of regular FDs in exchange.

What is SBI Amrit Varsha Yojana?

The SBI Amrit Varsha Yojana from the State Bank of India is a fixed-term FD lasting 444 days. At present, the bank provides an interest rate of 6.45% for regular customers and 6.95% for senior citizens. Investors can initiate this scheme with a minimum deposit of Rs 1,000 via bank branches, the YONO app, or internet banking.

Who is SBI WeCare plan for?

The WeCare plan from SBI is exclusively designed for senior citizens aged 60 and above. It applies to FDs with a maturity period of 5 years or longer. Under this scheme, senior citizens receive an interest rate of approximately 7.05%, which includes an additional premium for seniors.

What are Bank of Baroda and PNB offering?

Bank of Baroda’s 444-day special FD provides an interest rate of 6.45% for general investors, 6.95% for senior citizens, and 7.05% for super senior citizens aged over 80 years. Punjab National Bank’s 444-day special FD provides the highest interest rates compared to similar offerings, with rates of 6.60% for general customers, 7.10% for senior citizens, and up to 7.40% for super senior citizens.

What makes customers favor Special FD?

The primary benefit of special FDs is their slightly elevated returns. Even a difference of just 0.20% to 0.40% in interest rates compared to regular FDs can entice investors, particularly those who depend on interest income. For individuals with extra funds that they won’t need for a while, a special FD can yield better returns.

Why do many still prefer a normal FD?

In spite of the increasing appeal of special schemes, regular FDs continue to be the favored option for numerous individuals, mainly because of their flexibility. With a standard FD, investors can select a tenure that suits their needs, whether it be 1 year, 2 years, 3 years, or 5 years. This flexibility aids in planning for future expenses and financial objectives.

How simple is it to access funds when necessary?

Many investors are drawn to high interest rates, but the ability to withdraw funds when needed is also crucial. Premature withdrawals are generally straightforward with regular FDs, although some penalties may apply. The rules regarding early withdrawals for special FDs can differ by bank and scheme.

Who benefits more?

Senior citizens stand to gain the most from special FD schemes, as banks provide them with additional interest. Consequently, retirees and those seeking consistent interest income are particularly attracted to these offerings.

Ultimately, which option is superior?

Determining whether a normal FD or a special FD is better entirely hinges on the investor’s needs. If someone requires more flexibility, may need to withdraw funds early, or prefers to select the maturity date at their convenience, then a normal FD could be the more suitable choice. At the same time, investors who have extra money and are comfortable with the fixed lock-in period can get slightly higher returns from special FDs.