Benefits & Features of Term Deposit
03 Jul 2019
Earning income from your investments doesn’t have to be a complicated exercise. It is possible to earn a decent interest income out of the amount lying in your bank account by opening a term deposit account. A term deposit is any amount kept with the bank for a fixed period of time. With a Bank of Baroda fixed term deposit, you can open a term deposit bank account for a period as short as 7 days and earn income.
Benefits of Term Deposit:
Easy and convenient:
Opening a bank term deposit is very convenient. It can be opened online through NetBanking, or via the mobile banking application. Forms for a term deposit are available online and in branches.
Competitive interest rates:
Bank of Baroda offers competitive interest rates on term deposit schemes. The interest rates differ based on the period of the fixed deposit.
Bank of Baroda offers different options for fixed term deposits. The periods can be as short as 7 days or go up to 10 years.
Loan/Overdraft facility available:
Bank of Baroda term deposit customers can avail a loan/overdraft facility against their time deposit. The loan amount is available up to 95% of the fixed deposit amount. The rate of interest on these loans is 1.5% to 1.75% over and above the fixed deposit rate.
Term deposits can be used to create investments in the name of children and senior citizens.
You can use the nomination facility to nominate different people for different fixed deposits. Nomination can be done online and in the form as well.
Premature withdrawal allowed:
Each term deposit opening form has an option, callable or non callable. If the callable option is selected, it allows you to withdraw your term deposit prematurely. The rate of interest paid will be 1% less than the time deposit rate of interest.
Features of Term Deposit Scheme:
Fixed Term Investments:
Each bank term deposit is kept for the fixed duration that is selected. This amount is blocked for that duration and unless the callable option is chosen, the amount cannot be withdrawn before maturity.
Earn Interest half yearly:
Interest is earned half yearly compounded quarterly on these deposits. It is credited to the fixed deposit account on maturity. Monthly or Quarterly payment of interest in linked SB account is also available in selective schemes.
Beneficial rate for senior citizens:
Senior citizens get a higher rate of interest on these deposits. Bank of Baroda gives 0.5% extra to senior citizens for their term deposits.
No TDS if interest amount is less than Rs. 10,000/-
The limit for deducting TDS is Rs. 10,000. If your income is below the no tax limit, you can fill Form 15G/15H with the bank and TDS won’t be deducted.
Auto renewal of fixed deposit:
Instructions can be given to the bank to auto renew the term deposit once it matures. The principal and interest amount will be renewed automatically on maturity.
Minimum deposit amount:
The minimum deposit amount is Rs. 1,000 and can be increased in multiples of Rs. 100.
Opening a fixed deposit with Bank of Baroda is really easy and simple. It can be done online within a matter of minutes and opening it in a branch is convenient as well.
Baroda Tax Saving Term Deposit
Opening a term deposit to earn interest income is an excellent way to make use of the funds lying in your bank account. But by opting for a tax saving fixed deposit, you can also earn interest income and get a tax benefit. Bank of Baroda’s Baroda Tax Saving Term Deposit helps you to save tax while earning income
Tax saving FD features:
Only individuals and Hindu Undivided Families are allowed to open this tax saving fixed deposit. Deposits can be made in a single or joint name. As per Government of India guidelines, the Income Tax benefit is allowed to the first holder of this fixed deposit.
Amount of deposit
The minimum amount of deposit allowed is Rs. 100 and in multiples of Rs. 100. The maximum amount in a financial year is Rs. 1,50,000.
Tenure of deposit
The minimum lock in period for tax saving deposits is 60 months. The maximum tenure is 120 months.
Payment of interest
Interest is compounded quarterly in a tax saving FD. Interest is credited to the accounts at the end of the quarter. This is one of the best tax saving deposits features.
Premature closure of such deposits is not allowed until the maturity of the tax saving FD. This is allowed on customer’s request only after completion of 5 years at Bank’s discretion. The bank will pay interest at 1% below the tax saving FD interest rate in such cases. In case of death of depositor, premature withdrawal is allowed.
Auto renewal of such deposits is allowed, but not under tax saving deposits scheme. The deposit will be renewed as a regular term deposit for a period of 1 year.
Tax saving FD benefits:
The principal amount invested as a tax saving FD is allowed as a deduction to the first holder of the FD under Section 80C of the Income Tax Act. The maximum deduction allowed in a financial year is Rs. 1,50,000.
No TDS if Form 15H/15G submitted
This FD is subject to TDS rules and regulations. The interest earned on this deposit is taxable. However, if your income is not liable to tax, you can submit a Form 15H/15G and the bank won’t deduct TDS on your interest.
Beneficial rate to senior citizen:
Senior citizens can get a better rate of interest on such deposits. Bank of Baroda pays 0.5% over and above the tax saving FD rates to senior citizens. This is available for deposits below Rs. 1 crore.
Nomination facility available
It is possible to set up nomination for the tax saving FD.
The tax saving FD can be transferred from one branch to another branch at the request of the customer. This can be done by submitting a written request to the branch where the customer has the tax saving FD.
Minor accounts for individuals
It is possible to open a tax saving fixed deposit for minors as well. These tax saving deposits can serve as important means of financial planning for them.
Bank of Baroda offers tax saving fixed deposits online and offline through their branches. Opening these is convenient and easy and can be done even in a matter of minutes.
Benefits of Life Insurance
Life insurance is a must in today’s world. Modern living is an expensive business, and people have to bear the burden of huge costs like children’s education, EMIs on home loans, healthcare and so on. So it is important for every earning member to have a life insurance policy to protect the financial interests of his or her family. There are many benefits of life insurance policy, which we will look at in this article.
Features of life insurance
Let’s look at the features and advantages of life insurance policy:
Protection: The first and foremost objective of a life insurance policy is to ensure the financial protection of your family, and this could include dependent parents, spouse, children or siblings. The demise of the sole earning member could put dependents to considerable hardship, especially since cost of living is very high these days. Life insurance gives you the assurance that your family members will be looked after in the event of your untimely demise.
Contract: Life insurance is basically a contract between the insurers and the individual who takes out the policy. You pay premiums every quarterly/half yearly/yearly to the company. In return, the insurer will give a lump sum to your family in the event of your demise.
Premiums: Premiums are paid quarterly / half yearly which you need to pay to get life insurance. The amount will vary from person to person, depending on the tenure of the policy, age of the policyholder, health and type of policy.
Affordable: Life insurance is an affordable way of ensuring the financial well-being of your family. Premiums on policies, particularly term insurance, are quite low and worth your while for the protection they offer.
Easy to buy: Buying insurance from company is quite easy. Insurance companies have specified persons, who will visit you at your home or office and help you with options and paperwork. You can also do it online at your convenience.
Tax benefits: Another one of the benefits of life insurance policy is that you can deduct the premiums you have paid from your taxable income. Under Section 80C of the Income Tax Act.
Savings: There are some life insurance products that combine savings and insurance. This can be a good way of saving for the future and protecting your family at the same time
Types of life insurance
Now that we’ve seen the essential features of life insurance policy, let’s look at the types:
This is the most basic, and most popular, of life insurance policies. You purchase a policy for a certain period for which you pay premiums. For example, if a policyholder wants a policy till the age of 60, he or she can take one. And if the policyholder passes away before 60, the nominee is paid the death benefits.
Unit-linked Insurance Plan
A Unit-Linked Insurance Plan (ULIP) combines investment with insurance. At the end of the policy, the policyholder gets a certain sum. This is unlike a term plan where the payout is made only on the death of the policyholder. Part of the premium is paid for life insurance, while the remainder is invested in either stocks or bonds, depending on the investor’s risk appetite and investment goals. The investments yield returns which are then given to the policyholder after the end of the policy period