Understand 5 important factors in an Fixed Deposit Receipt
With interest rates ruling high, bank fixed deposits have appeared as a smart investment option for many. Understand five important factors you should check in your fixed deposit receipt:
Rate of interest and term condition: For a fixed deposit investor, it may be appear to be a basic point, but it’s an important to re-check if the ROI and term mentioned in the fixed deposit receipt are correct, especially when you are renewing the old fixed deposit.
Occasionally, banks stop old schemes and the ROI also changes. If you have opted to receive interest at regular intervals, say quarterly; do check if it is mentioned in the receipt. If not, it is better to recheck with banker.
Auto Renewal and Dates of maturity: The expiry date is appeared on the receipt. it’s worth checking the date of maturity. If you have selected automatic renewal of a fixed deposit, whether it is mentioned in the receipt.
Prepayment penalty: If there is any penalty, it should be mentioned in the receipt. When a bank says it charges 1% as prepayment penalty, it means it will pay 1% less than the applicable rate of interest for the term the deposit has run. For example, if you made a fixed deposit for a year at 10%, but withdrew it after six months and if the bank offers 8% for a six-month FD, then you will be paid a rate of interest of 7%.
Nomination: Please check if the receipt also acknowledges that you have made a nomination. A simple form can help you register your nomination for the fixed deposit. In case of the unfortunate death of a deposit holder, the nominee is paid the FD proceeds.
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Declaration to save TDS: Banks deduct tax at source if the interest income exceeds 10,000. If your income falls in the ‘no income tax bracket’, you can submit declaration in form 15G or form 15H, as applicable. But do make sure that the same is recorded in the banker’s records. Some banks make specific mention of such submissions on the bank fixed deposit receipts.
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