Money word, in plain English ← Back to all terms
Fixed deposit
Money placed with a bank for a set period at a rate agreed upfront.
Example. A ₹1,00,000 deposit at 7% for a year pays about ₹7,000 in interest.
A fixed deposit promises a known return over a known period, which is its whole appeal. Breaking it early usually costs a penalty and a lower rate. The interest is generally taxable, and if the rate after tax is below inflation your buying power quietly shrinks even though the balance grows. A sweep deposit is a variant that converts back to cash automatically when your account runs short.
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