Key Features of Fixed Deposit Accounts Fixed Tenure: A fixed deposit has a specified term ranging from a few months to several years. Common tenures include 1 month, 6 months, 1 year, 3 years, or 5 years, although terms can vary by financial institution. Interest Rates: Fixed deposits offer higher interest rates than regular savings accounts, making them an attractive option for investors looking for low-risk returns. The interest rate is fixed at the time of deposit and remains unchanged throughout the tenure. Interest rates on fixed deposits vary depending on factors like the deposit amount, tenure, and prevailing market conditions. Typically, longer tenures may offer slightly higher interest rates. Interest Payout Options: The interest earned on a fixed deposit can be paid in different ways: Cumulative Option: Interest is compounded quarterly or annually and added to the principal amount. The interest is paid out at the time of maturity. Non-Cumulative Option: Interest is paid out at regular intervals (monthly, quarterly, or annually), providing periodic income for the depositor. Minimum and Maximum Deposit Amount: Fixed deposit accounts typically have a minimum deposit requirement. This amount can vary depending on the bank and the type of FD. For example, a bank may require a minimum deposit of $500 or $1,000. There is usually no maximum deposit limit, allowing you to invest a large sum of money if desired. Premature Withdrawal: While your money is locked in for the fixed term, many banks allow premature withdrawal of the deposit before maturity. However, this typically comes with a penalty, such as a reduction in the interest rate or a charge for early withdrawal. It's important to check the terms and conditions of the bank regarding premature withdrawal to understand the penalties and fees involved. Safety and Security: Fixed deposits are considered a safe investment option because they are typically backed by government regulations and protected by deposit insurance schemes (such as the FDIC in the U.S. or DICGC in India) up to a certain limit. Taxation: Interest earned on fixed deposits is subject to taxation according to the prevailing tax laws in your country. In some countries, tax is deducted at source (TDS), and the interest is taxable under income tax. Some fixed deposits, such as those with a tenure of more than 5 years, may qualify for tax-saving FD benefits, offering tax deductions under certain sections of the tax code.