Long-Term Fixed Deposit – Meaning, Interest Rates & Benefits

Posted on Tuesday, November 19th, 2024 | By IndusInd Bank

Investors who seek a long-term approach to investing often look for options that are stable and predictable. Fixed Deposits (FDs) with their flexible tenures and guaranteed returns are an ideal solution for such investors. By investing in an FD for the long term, investors can enjoy a variety of benefits, of which compounded returns is one advantage.  

Whether your long-term goal is to fund your child’s education, support your retirement, or wealth accumulation, a long-term FD can be a great value addition to your financial portfolio. Let’s learn more about it, with a special focus on its interest rates.  

What Are Long-Term Fixed Deposits?

• A long-term fixed deposit is an investment option where you deposit a lump sum of money with a bank for a prolonged period. You can opt for a long-term FD with a tenure of two to ten years or more.  

• The bank pays interest on the deposit. You can withdraw the interest at regular intervals or allow it to compound until the FD matures.  

• A long-term FD is ideal for those who do not require immediate access to their funds and want steady returns over time. These FDs are also ideal for those who do not want exposure to market risks. 

• Depending on the bank and the tenure, the interest rate for a long-term FD can be higher as compared to a short-term deposit.  

Understanding Interest Rates on Long-Term Fixed Deposits  

• One of the most attractive features of long-term fixed deposits is the potential to earn higher interest rates.  

• IndusInd Bank, for instance, offers higher interest rates for longer tenures. For example, at the time of publishing this blog, an FD held for 180 days (approximately six months) offers interest at 5%. However, a 2-year FD could yield 7.75%.  

• However, it is crucial to understand that the interest rate for a long-term FD does not always increase with tenure. Banks usually have a ceiling to how much interest they can offer.  

• Therefore, while longer tenures tend to attract better rates, you must compare different FD options first. 

• You can also use tools such as the FD Calculator from IndusInd Bank to get an estimate of your returns based on your chosen tenure. This will allow you to plan your finances in a smoother manner.  

* Please note that interest rates are subject to change. Refer for the latest fixed deposit interest rates. 

Benefits of Long-Term FDs

Investing in long-term FDs with IndusInd Bank offers a multitude of benefits: 

1. Higher Interest Potential

As discussed above, long-term FD interest rates tend to be higher than those offered on short-term FDs. This can allow you to maximise your returns over time. 

2. Predictable and Assured Returns

Long-term FDs are a safe, low-risk investment option. They provide returns at fixed interest rates. So, you can rest assured that you will receive guaranteed returns on your investment. Most banks also allow you to check the expected FD returns at maturity within their app or net banking portal.  

3. Financial Discipline

A long-term FD is ideal if you are looking for a disciplined approach to saving. With an FD, you have to lock in your funds for an extended period. Thus, you are less likely to make impulsive withdrawals.  

4. Flexible Tenure

A long-term FD will have a tenure exceeding one year. However, IndusInd Bank gives you the flexibility to choose a tenure that helps you achieve your financial goals at your own pace. 

5. Compounding Effect

You can enjoy the benefit of compounding by investing in an FD for the long term. For the uninitiated, compounding is where the interest earned is added to the principal, and interest is then calculated on the new, higher principal amount. This can largely increase the maturity amount, especially if compounding happens on a more frequent basis.  

6. Flexible Payout Options

With a long-term fixed deposit, you can choose to receive interest payouts at regular intervals, such as monthly or quarterly. Or you can opt for cumulative interest, where the interest is reinvested until maturity. 

Also Read: Navigating the Benefits of Auto-Renewal Fixed Deposits 

Conclusion

Thus, long-term fixed deposits are an attractive combination of stability, growth, and peace of mind. By locking in your savings for an extended period, you can benefit from attractive interest rates and secure your financial future.  

IndusInd Bank provides Fixed Deposits at high interest rates to help you meet your financial goals with ease. With our hassle-free online booking process, you can book an FD in minutes. Non-IndusInd Bank customers can also book an instant FD through our website.  

Visit our website to book your Fixed Deposit and start your journey toward financial stability today!  

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.