Big news on Bank FD's drawbacks! Be aware of these five major drawbacks before making any investments in foreign exchange

Big news on Bank FD's drawbacks! Be aware of these five major drawbacks before making any investments in foreign exchange

Big news on Bank FD's drawbacks! Be aware of these five major drawbacks before making any investments in foreign exchange

FD Interest Rate: This information is helpful if you're considering making an FD investment. In order to maximize your gains, you may be searching for a better FD interest rate. In light of this, let us to inform you that obtaining a bank savings account (FD) has these five significant drawbacks in addition to its benefits. Tell us about the news listed below.

FD Rate: When one hears the phrase "investment," only one name immediately comes to mind: FD, i.e. Fixed-Rate Investment. Most often, individuals put money in it without realizing the potential losses. We are going to discuss five major drawbacks with foreign direct investment today.

1. Interest will incur taxes that must be paid.

The interest earned on FD cannot be deposited straight into your account. On the interest received, full taxation is imposed. The interest you earn from FD is included in your income when you submit your ITR, and you will be required to pay taxes on it to the government.

2. TDS tax

On the interest obtained from FD, TDS is also imposed. At the conclusion of each year, banks subtract it from the interest generated. Nonetheless, the depositor has the option to refuse TDS and pay the full amount of interest at maturity. Form 26AS displays all of the TDS deductions made for FD and is connected to the depositor's PAN card.

tax rate and status

when the total interest earned on all of a bank's FDs is less than Rs 10,000

10% if the interest payout above Rs 10,000

20% if the FD holder fails to provide his PAN card information

Nothing if the FD holder's annual total income and profits from all sources do not above Rs 2,50,000.

Be aware that no TDS would be withheld from the FD interest if the depositor's yearly income is less than Rs 2.5 lakh. Send Forms 15G and 15H to the relevant bank branch to make sure the bank is aware of your modest income.

3. low rates of interest

In contrast, the greatest interest rate that FD may provide you is 10%. Even that much income is not always earned, whereas returns from other investment vehicles, such as mutual funds, might reach 20% or even 30%. However, one drawback of mutual funds (MFs) is their high risk profile; investors with a greater stomach for risk might make more money with MF investments.

4. Perhaps interest rates are less than inflation.

On occasion, the interest rate on FD may be less than the rate of inflation. Furthermore, the bank will not pay you a single cent more than the amount you placed if you take your money out before the designated limit.

5. No rise in interest rates

With an FD, the bank does not offer you a single rupee beyond the agreed-upon percentage; rather, you get consistent interest over the course of the full term.

FDs were only beneficial for short-term savings in the past, but they are now helpful for longer-term savings. However, it cannot be considered a tax-free choice. However, PPF investments are made outside of the tax code.