Depositing funds in a savings account may be the first step in financial planning, but to deposit a large sum of amount, a fixed deposit is a right option.
Why Fixed Deposits Are Greater Than Savings Accounts?
More interest – Not only in Indonesia, around the world the bankers offer higher interest rate for fixed deposits. Some banks pursue tiered interest rates, where the interest rate increases as the accumulated fund increase.
Assured interest – Even under the high volatile stock market and falling inflation, the interest rate on fixed deposits is untouched. Liquid funds invested in savings account bear a little interest when compared to an FD. For example, more than 10 billion fund in Citibank Indonesia’s Max Save scheme offers guaranteed 5.5% interest.
Tenure – The person who deposits can decide the mandate and it can be extended up to 10 years. The deposits with longer tenure reap higher benefits.
Automatic roll over – The automatic rollover facility automatically renews the deposit upon maturity. However, you have the choice to withdraw all the funds or just renew the FD with the principal amount and transfer the interest to the savings or current account.
Collateral security – The funds deposited in FD serve as a collateral security to obtain loans.
Credit card – Credit cards issued for the FD come with a considerably lower percentage of interest rate.
OD facility – Some banks offer overdraft facility for FD, allowing you to access funds during an emergency, yet enjoy a higher interest for the deposits.