Banks vs. NBFC: Where to Place Your Fixed Deposits in 2024

In today’s world, when it comes to investing money, there are various options available in the market. One of the most popular investment options which have been around for decades is the fixed deposit. A fixed deposit, also known as FD, is a financial instrument in which a sum of money is deposited in a bank or non-banking financial company (NBFC) for a predetermined period, at a fixed interest rate. The period can range from a few months to several years. In contrast to investing in stocks or mutual funds, FD offers a low-risk investment option while providing a fixed return on investment.

Both banks and NBFCs offer fixed deposits as an investment option. Banks are traditional institutions that have been around for a long time, while NBFCs are new-age financial institutions that have gained popularity in recent times. In this article, we will compare banks and NBFCs in terms of fixed deposits to help you make an informed decision on where to place your fixed deposits in 2024.

Fixed Deposits at Banks

Banks are traditional institutions that have been around for centuries. Investing in a fixed deposit with a bank is considered a safe option as it is backed by the government’s deposit insurance cover. In the event of a bank’s failure, every depositor is insured up to a certain amount per account.

Banks offer fixed deposits with varying tenures, ranging from a few months to several years. The interest rate offered on fixed deposits varies from bank to bank and depends on various factors such as market conditions, deposit tenure, etc. The interest rate offered by banks for fixed deposits ranges from 3% to 5% per annum, depending on the duration of the deposit.

While fixed deposits with banks offer security and stable returns, there are a few drawbacks to investing in bank FDs. Banks charge a penalty for premature withdrawal of funds from fixed deposits, which can reduce returns. Additionally, the interest earned on fixed deposits is subject to taxation as per the investor’s tax bracket.

Fixed Deposits at NBFCs

NBFCs, on the other hand, are relatively new to the financial industry and have gained popularity due to their competitive interest rates and personalized services. Non-banking financial companies do not hold a banking license, but they offer services similar to banks, such as fixed deposits.

NBFCs offer fixed deposits with varying tenures and competitive interest rates, depending on the duration of the deposit. Additionally, NBFCs also offer senior citizens higher interest rates on fixed deposits, making it a lucrative option for senior citizens.

Another advantage of investing in fixed deposits with NBFCs is that they do not impose penalties for premature withdrawal of funds. This means that investors can withdraw their money without any penalty, making it easier for investors to access their money in case of an emergency.

However, investing in fixed deposits with NBFCs also has its disadvantages. NBFCs are not backed by the government’s deposit insurance cover, which means that in the event of the company’s failure, there is no assurance of recovering the invested amount. Additionally, investing with an NBFC carries a certain amount of risk as NBFCs are not as strictly regulated as banks.

Bajaj Finserv App: The Perfect Tool for FD Investors

With the advent of technology, investing in fixed deposits has become more accessible and hassle-free. Investors can now invest in FDs with just a few clicks through FD apps. One such reliable option is the Bajaj Finserv App. The app offers investors the option to invest in fixed deposits with attractive interest rates. Investors can also choose their deposit tenure as per their financial goals and get access to a host of other services.

Additionally, the app offers investors complete transparency and ease of use, making it easier for investors to track their investments. Investors can view their investment portfolio in real-time and make well-informed decisions accordingly.

In conclusion, fixed deposits remain a popular investment option in 2024 due to their low-risk nature and stable returns. However, investors must carefully consider different factors such as interest rates, flexibility, and the credibility of institutions before investing in fixed deposits. Banks offer stability, but NBFCs offer higher interest rates and flexibility. Investors must weigh their investment objectives and risk appetite to choose the best option for them.

Moreover, using an FD app like the Bajaj Finserv App can simplify and streamline the investment process. The app provides features such as easy account access, personalized investment advice, investment tracking, easy investment renewal, and much more. Through the app, investors can easily explore their options, compare interest rates, and invest in fixed deposits conveniently.

Lastly, the right choice of where to invest fixed deposits in 2024 depends solely on the individual’s financial goals and preferences. Investors must evaluate their portfolio and assess the risk and return ratios before deciding to invest. While fixed deposits are considered low-risk investments, it is important to remember that they are subject to inflation and interest rate fluctuations.

In conclusion, whether you choose to invest in banks or NBFCs, or use an FD app like the Bajaj Finserv App, you must always evaluate your investment goals, assess the risk and return ratios and make informed decisions. With the right approach and guidance, fixed deposits can be an ideal investment option that offers stability and reasonable returns in 2024. Investing in fixed deposits can bring peace of mind and allow investors to secure their financial future. You can also easily open a Demat & Trading Account and start trading online. You can choose from 3 different trading packs and even trade as low as ₹5 per order. Both Fixed Deposit and Demat & Trading Account Application process is simple and doesn’t take a lot of time. You can apply in just a few easy steps through the Bajaj Finserv App. Download the app from App Store and Play Store now and make your investments on the app hassle-free.