There are two types of regular fixed deposits – callable and non-callable fixed deposits. Let’s tell you about both the types, benefits and drawbacks.
Fixed deposits (FDs) are one of the most popular investment options as they offer guaranteed returns to investors. While there are several benefits, there are some restrictions as well. For example, investors are not allowed to withdraw funds in some cases. Here we are going to tell you how you can opt for such facilities and what are the benefits.
There are two types of regular fixed deposits – callable and non-callable fixed deposits. Let’s tell you about both the types, benefits and drawbacks.
Non-Callable Fixed Deposits
These fixed deposits do not offer investors the facility of early withdrawals. Therefore the funds invested in these FDs are locked in until maturity.
While these FDs do not offer the convenience of premature withdrawal, they offer higher interest rates.
Callable Fixed Deposits
These fixed deposits give investors the convenience of early withdrawals i.e. those investing in callable fixed deposits can withdraw the amount prematurely.
However, the banks impose certain penalties for such premature withdrawals. This may vary across banks. In other words, callable fixed deposits offer a balance between easy access to funds and good returns.
Non-Callable Vs Callable: Which one is better?
The interest rates offered by banks on callable deposits are generally lower than those offered on non-callable fixed deposits. So, this is not suited for those who are seeking maximum return out of their investments. Instead, non-callable FDs are good for those who want to save money but also need easy access to the funds whenever needed.
On the other hand, people looking for solid returns must opt for non-callable fixed deposits. The fixed years of investment offer a steady source as the investor’s money is locked for a specific period or until maturity. This type of fixed deposit is suited for those who have sufficient funds and can manage any requirement without breaking the FD.
