Question

Fixed Deposit, a financial instrument provided by banks is also known as ______.
1. Recurring deposit
2. Current deposit
3. Term Deposit
4. Savings bank deposit

Answer 1

Correct Answer - Option 3 : Term Deposit

The correct answer is Term Deposit.

• Fixed deposit means that the investor fixes some investment until given maturity date.

• The rate of interest in fixed deposits is higher than the regular savings account.
• The interest rate varies from 4 to 7.5%.
• The tenure is between 7,15 or 45 days up to 10 years.
• The longer the term of deposit the more is the rate of interest but these days banks offer lower rates of interest in case of long periods.
• It also offers wealth tax and income tax benefits.
• This scheme is covered by Deposit Insurance and Credit Guarantee Corporation(DICGC).

• A savings account is an account where users can deposit savings with the bank and earn interest at the same time. 
• A current account is an account where users can deposit money to carry out business transactions.
• A recurring deposit is a special kind of term deposit offered by banks that help people with regular incomes to deposit a fixed amount every month into their recurring deposit account and earn interest at the rate applicable to fixed deposits.