A fixed deposit (FD) is a financial product offered by banks or non-bank financial companies (NBFCs) that pays a greater interest rate than typical savings account until the maturity date.

The difference between a fixed deposit and a recurring deposit or a demand deposit is that the money cannot be withdrawn from the FD before maturity. Some banks may provide extra services to FD holders, such as low-interest loans secured by FD certificates.

Fixed deposits are term deposits that pay a high rate of interest and are offered by banks. Fixed deposits are the most common type of term deposit, although there are also recurring deposits and Flexi Fixed Deposits.

FDs provide greater interest rates than savings accounts to compensate for the lack of liquidity.

 For FDs, the maximum duration allowed is ten years. In general, the greater the rate of interest, the longer the period of the deposit.

Although banks have the option of refusing to return FDs before the term of the deposit expires, they rarely do so. A premature withdrawal is what this is referred to as. Interest is paid at the rate in effect at the time of withdrawal in such instances.

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