Difference Between Callable & Non-Callable FD

Posted on Friday, October 25th, 2024 | By IndusInd Bank

When you make an investment decision, you must look at several factors before finalising any option. When it comes to Fixed Deposits (FDs), one of the safest investment options out there, you must consider which FD you want to go for – callable or non-callable FDs.

While both are term deposits offering a secure and reliable way to earn returns, there are a few significant differences between a callable FD and a non-callable FD.

What are Callable Fixed Deposits?

Callable FDs allow the investor to withdraw their funds before the maturity date. They offer flexibility and liquidity which make it a suitable option if you need access to your funds on short notice.

Features of Callable FDs

1. Liquidity

One of the primary features of a callable FD is that you can withdraw funds before maturity. This provides you with the flexibility to access your money in case of emergencies or unforeseen financial needs.

2. Premature Withdrawal Penalty

Callable FDs allow for early withdrawal. However, you may incur a penalty for the same. This can be in the form of a reduced interest rate or a fixed fee.

3. Lower Interest Rates

Callable FDs may come with lower interest rates compared to non-callable FDs. This is because the bank takes on the risk of the investor withdrawing funds early.

4. Shorter Tenures

A callable FD may have a shorter tenure. This is so that the investor has frequent opportunities to access their funds without penalty.

What are Non-Callable Fixed Deposits?

Non-callable fixed deposits do not allow for premature withdrawal. Once the funds are deposited, they are locked in until the maturity date. This type of FD is ideal for investors who do not need immediate liquidity and are looking for higher returns.

Features of non-callable FDs

1. Higher Interest Rates

A non-callable FD will likely offer higher interest rates compared to callable FDs. This is because the bank is assured that the funds will remain with them until maturity.

2. No Premature Withdrawal

Investors cannot withdraw funds before the maturity date in a non-callable FD. This ensures that the investment remains intact for the agreed tenure.

3. Suitable for Long-Term Goals

Given their higher interest rates and fixed tenure, non-callable FDs are ideal for long-term financial goals. You can add it to your portfolio for retirement planning or children’s higher education.

Should You Opt for Callable or Non-Callable FDs?

Now you know the difference between callable and non-callable FDs. However, here are some more points to consider when choosing the right product.  

1. Liquidity Needs

A callable FD is the better option if you think you are likely to need access to your funds before the maturity date. If you are confident, you will not need to access your funds before maturity or you have other liquid emergency funds, a non-callable FD can be the right option. 

2. Interest Rates

Callable FDs offer lower interest rates due to the flexibility of early withdrawal. On the other hand, non-callable FDs offer higher interest rates. 

So, you must prioritise your needs – liquidity/flexibility or higher earnings. Then, choose from callable vs non-callable FDs accordingly. 

Also Read: Different Types of Fixed Deposits

Conclusion

Callable and non-callable FDs both offer distinct features and benefits which make them suitable for short-term goals and long-term goals respectively. Assess your financial needs and goals to choose an FD option that best aligns with your investment strategy.

If you have made your pick between callable and non-callable FDs, head over to our Fixed Deposit page to start investing now. We have a simple, hassle-free process to book an FD, which is accessible even for non-IndusInd Bank customers. With our high FD interest rates, flexible tenure options, flexible options for interest payments, and more, you can rest assured that your funds are in the right hands to grow. 

Book an FD with IndusInd Bank now! 

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.