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FD Benefits: Even today, Fixed Deposit (FD) is considered a reliable and safe investment option. Despite many new schemes, financial experts recommend including it in the portfolio. Your money is safe in FD and it gives guaranteed returns, which makes it an attractive option for investors.

But have you ever wondered what happens to your FD or the amount deposited in the account if your bank collapses? There are many things that the bank does not tell you about. Know about it here and about all the other benefits available on FD-

Amounts up to Rs 5 lakh remain safe-
If your bank goes bankrupt, then your Fixed Deposit (FD) gets an insurance cover of up to ₹ 5 lakh. Very few people have this information. This cover is available under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act. Earlier this amount was Rs 1 lakh, which has now been increased to Rs 5 lakh, which is a big relief for the depositors.

If your deposit amount in a bank is more than Rs 5 lakh and the bank goes bankrupt, even then you will get a maximum of Rs 5 lakh back from the Deposit Insurance and Credit Guarantee Corporation (DICGC). For example, if you have made an FD of Rs 10 lakh and the bank goes bankrupt, then you will get only Rs 5 lakh and the remaining Rs 5 lakh will be lost.

Also, know about these benefits of FD-

- Whether you get FD done for one year, 5 years, or 10 years, you know how much money you will get on it at the time of maturity. This is the reason why FD is considered an investment with a guaranteed return.

- You can keep the tenure of FD according to your needs. In many banks, you are given the option of FD from 7 days to 10 years. You also get interest in it according to the tenure. Apart from this, you get the benefit of compounding interest on FD, that is, you get interest on the amount invested, as well as interest on interest.

- If you suddenly need money, you can take a loan against it without breaking the FD. Banks give 90 to 95 percent of the total amount of FD as a loan. Generally, the interest on the loan against FD is one percent more than the FD.

- If you make an FD for 5 years or more, then you get a chance to claim tax exemption under 80C. If you make an FD for less than 5 years, then you will have to pay taxes.

- Most banks give 0.50% more interest to senior citizens than the general public. 'Super Senior Citizens' above the age of 80 years get an additional interest of 0.25%. Thus, this is a beneficial investment option for senior citizens.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.