How are Fixed Deposits different from Savings Account

Opening a Savings or Fixed Deposit Account is often the fundamental step an individual takes to embark on their banking journey. Both banking solutions help individuals accumulate funds; however, they differ a lot in terms of offering interest rates, returns, withdrawal, and other patterns. Let's get to know the difference between a Savings Account and a Fixed Deposit Account.

Here are some of the key points of distinction pertaining to the Savings Account and Fixed Deposit account:

• Rate of interest:

Typically, a Savings Account's interest rate is low as compared to a Fixed Deposit Account. However, AU Small Finance Bank’s Savings Account is a high interest-bearing account letting you earn higher interest. While a Regular Fixed Deposit Account offers guaranteed returns.

• Flexibility & Accessibility:

It's easy to deposit money anytime into a Savings Account & you can deposit any amount. On the other hand, a Fixed Deposit Account requires you to invest a minimum of INR 1,000. There is no limit on the maximum investment amount. At AU Small Finance Bank, you can readily access both accounts using the AU 0101 App, NetBanking and AU Small Finance Bank website.

• Liquidity Options:

Both AU Small Finance Bank Savings Account & Regular Fixed Deposit Account are highly liquid. While you can make a premature or partial withdrawal from an FD scheme; however, you may be required to pay a penalty.

• Opportunity to Secure a Loan:

When you don't have a credit history & are looking for a loan, you can opt for an Overdraft Loan Facility against your FD Account whenever the need arises.

• Opportunity to Save:

Both account types encourage you to save and inculcate financial discipline. With a Regular Fixed Deposit, you can deposit funds for a fixed tenure ranging from 7 days to 10 years & earn assured returns.

• Senior Citizen Benefits:

At AU Small Finance Bank, senior citizens can enjoy special interest rate of up to 0.50% on Regular Fixed Deposits that is over and above the regular interest rates. With monthly, quarterly, and yearly interest payouts, FDs are a great option when you would like to draw a regular source of income. Opening a Senior Citizen Savings Account provides benefits such as monthly interest payouts, high interest rates, extended banking hours^, etc.

• Tax Benefit:

As for tax planning, Fixed Deposit investments can help you save under Section 80C of the IT Act, 1961. You can choose to invest in a 5-year Tax-Saving Fixed Deposit Account with us. The account has a lock-in period of 5 years. The interest you receive on the Savings Account is taxable under "Income from Other Sources”. As per Section 80TTA, one can avail a deduction of up to INR 10,000, but if the interest income is beyond INR 10,000, then it is taxable.

• Withdrawal Limit:

Ideally, one can withdraw funds from an FD scheme at the end of the term. But in case of an emergency, users can make a partial or premature withdrawal from the account. With an AU Small Finance Bank Savings Account, you can withdraw funds at any time using an AU Debit Card.

While a Savings Account can be helpful when you need urgent cash, when it comes to achieving life goals & saving for the future, an investment in a Fixed Deposit account becomes crucial.

Now you can easily apply for Savings Account with us through Video Banking or by visiting an AU Small Finance Bank branch or calling Customer Care. You can apply for a Regular Fixed Deposit through AU 0101 App / NetBanking or AU Small Finance Bank website if you are an existing customer.

Opening a Senior Citizen Savings Account provides benefits such as monthly interest payouts, high interest rates, etc.

^Not applicable in some select locations. To know your branch timings, click here.