InvestorQ : Can you throw some light on the pros and cons of bank deposits?
swati Bakhda made post

Can you throw some light on the pros and cons of bank deposits?

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Riya Dwivedi answered.
3 years ago
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Bank FDs, as they are popularly known, offer a higher rate of interest than your normal savings account. However, most bank FDs currently offer between 7-8% returns, which may not be too high if you consider inflation and the impact of taxes. Remember, FD interest is taxed at your peak tax rate. While such bank FDs are almost free from default risk, they do have a risk of better opportunities foregone. Bank FDs can offer tax benefits under Section 80C, under the overall limit of Rs.150,000 per annum if the savings are deposited in long term FDs with maturity of 5 years and above. While Bank FDs technically have a lock-in, any financier will be willing to give you a loan against your FD, which effectively makes it liquid in the event of any emergency.

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