7 Reasons Why you Should Invest in Company FDs

Fixed deposits (FDs) are considered one of the best investment options for the general public. A CRISIL study also found the same which puts life insurance, mutual funds, and stocks behind it.

Company FDs are those offered by non-banking financial companies (NBFCs). These are quite similar to those provided by other financial institutions but come with few differences. Company fixed deposits also deliver more returns on investment.   

Here are some of the reasons why you should invest in company FDs:

  1. Higher rate of interest

Interest rates on company FDs can go up to 9.10%. Generally, the rates are around 8.75%. Senior citizens can receive up to 0.35% more interest on the standard rate. Also, company FDs sometime offer an additional 0.25% interest to those who renew their account.

  1. Both short-term and long-term savings options

The investment tenors for company FD range from 12 to 60 months. Thus, you get to save for both short-term and long-term.

NBFCs like Bajaj Finserv have a special tenor FD of 15 months. This fixed deposit gives you 0.25% additional interest than the standard rate.

  1. Minimal amount to open an account

You can open a company FD account by depositing only Rs. 25,000. The maximum that you can invest can go up to Rs. 5 Crore.

  1. Guaranteed safety and stability

The majority of company fixed deposits come with safe and stable ratings from credit companies. For example, Bajaj Finance Fixed Deposit is rated FAAA by CRISIL and MAAA by ICRA, thereby, guaranteeing you returns after maturity.

  1. Flexible interest payment frequencies  

Company fixed deposits are of the following two types:

  • Non-cumulative FDs which give you interest monthly, quarterly, half-yearly, or yearly.

  • Cumulative FDs which give you interests only after maturity.

  1. Secured loans against fixed deposits  

Some NBFCs enable you to receive a secured loan against your fixed deposit. These loans are helpful in times of financial emergencies. You can receive up to 75% of your cumulative FD amount and up to 60% of your non-cumulative FD amount. The process involves minimal documentation, and lenders disburse the funds within one working day or so. The repayment tenor usually stretches from 90 days to up to the maturity date of your FD.

  1. Easy online application

NBFCs offer the option to apply for a fixed deposit online by providing only your name, phone number, email, city, and deposit amount. Furthermore, these financial companies let you manage your FD account online with ease.

These are some of the significant reasons why you should invest in a company fixed deposit. Make sure to use a fixed deposit calculator available online before you start investing.

The calculator tells you the returns you receive based on your investment options. You can choose the type of FD you are opting for – cumulative/non-cumulative, interest payment frequency amount, investment tenor, etc. Using this calculator is considerably simple and convenient.

Do ensure to compare the rate of interest offered by NBFCs with their company FDs before you opt for one.    

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