Question 1

How is FD interest worked out, and why can 400 days pay more than 1 year?

Accepted Answer

Most banks add interest to the deposit every quarter, so the next quarter's interest is worked out on a larger amount. Banks also set rates by exact number of days, and some pay a special rate for a particular tenure, such as 400 days. That is why a deposit for 400 days can pay a higher yearly rate than one for exactly 1 year. Our FD tool works on exact days, the way bank calculators do, so the figure can differ from a bank's by a few rupees.

Question 2

What is the difference between a callable and a non-callable FD?

Accepted Answer

A callable FD can be broken before it matures, usually with a small penalty on the rate. A non-callable FD cannot be broken, and banks sometimes pay a slightly higher rate for that. High-value non-callable deposits usually start at ₹1 crore or more, so they appear in our FD tool only when you say you will not need the money early and your amount is large enough.

Question 3

Is my money safe in an FD? What does deposit insurance cover?

Accepted Answer

Deposits in banks, including small finance banks, are insured by the DICGC up to ₹5 lakh per person per bank, covering your principal and interest together. Anything above that depends on the strength of the bank. Splitting a larger amount across banks keeps each part inside the limit; the FD tool shows what splitting would cost in interest.

Question 4

When does a bank deduct tax at source on FD interest?

Accepted Answer

A bank deducts tax at source (TDS) when the interest it pays you in a year crosses a limit, currently ₹50,000 for most people and ₹1,00,000 for senior citizens, counted bank by bank. The rate is 10% with a PAN and 20% without. The interest is taxable at your slab rate whether or not tax is cut, every year it is earned. If your income is below the taxable limit you can submit Form 15G or 15H. Rules change, so check the current ones or ask a tax adviser.

Question 5

What is a tax-saver FD and who does it suit?

Accepted Answer

A tax-saver FD is a 5-year deposit that cannot be broken early. Up to ₹1.5 lakh a year may be deducted from your taxable income under Section 80C, but only if you choose the old tax regime, and the limit is shared with PF, life insurance premiums and similar. Its interest is taxable. Our FD tool has a tax-saver option that shows the rates we have found and what the deduction is worth at your tax rate; not every bank is listed yet.

Question 6

Do senior citizens get a higher rate on every FD?

Accepted Answer

Most banks pay senior citizens (60 and above) 0.25 to 0.75 percentage points more on regular deposits, but not on every product. Some tax-saver and special deposits give no extra. Where a bank does not list a senior rate, our FD tool says so and shows the general rate.

Question 7

How does a SIP work, and what does the yearly return in your tool mean?

Accepted Answer

A SIP puts a fixed amount into a mutual fund every month, so you buy more units when prices are low and fewer when they are high. In our tools each instalment is invested at the start of the month, and the yearly return is the effective yearly rate: the single yearly rate that would turn your instalments into the final value. It is not a promise.

Question 8

Where do the weaker, middle and stronger growth cases come from?

Accepted Answer

From real history. For each fund type we took every Direct-plan Growth fund in the AMFI records that is still running, started a SIP (or a one-time investment) in every month since 2013, and measured the yearly return for the length of time you chose. Weaker is the 10th percentile, middle the 50th and stronger the 90th. Funds that were closed or merged are missing and the period was mostly a rising market, so the figures flatter results. Treat the middle case as a good-case guide, not a forecast.

Question 9

Is a SIP return guaranteed?

Accepted Answer

No. Mutual fund investments are subject to market risks. The value of your units can fall as well as rise, and you can get back less than you put in. Past returns do not guarantee future ones. Our tools show the range of what happened, including the worst cases, next to the middle.

Question 10

Should I invest a lump sum all at once or spread it over months?

Accepted Answer

In our history, putting the whole amount in on day one ended with at least as much as splitting it into 12 equal monthly parts in about three of every four start months, and spreading was ahead in the rest, usually when prices fell soon after. That is a fact about the past, not a rule, and the comparison leaves out any interest the waiting cash would earn. The Lump sum tool shows it for the fund type and time you choose.

Question 11

How does a lump sum compare with an FD?

Accepted Answer

An FD pays a rate fixed in advance; a fund's return is not fixed and can be lower, or negative. The Lump sum tool shows today's best FD for your amount and time next to the fund cases, and the share of real periods in which funds did better than that FD, so you can see both the upside and the risk. FD interest and fund gains are both taxed; tax is not included.

Question 12

Should I close my loan early or invest the money?

Accepted Answer

It comes down to one comparison: does the investment earn more than the loan costs, after charges and tax? Paying a loan down gives a certain return equal to its interest rate; an investment can earn more but is not certain. The Foreclose or invest tool works out the break-even return and shows it next to today's best FD and what funds actually returned. It does not tell you what to do, and it leaves out tax, including any deduction on home or education loan interest.

Question 13

What is the break-even return in Foreclose or invest?

Accepted Answer

It is the yearly return an investment must earn, every year until the loan would have ended, for investing to finish level with paying the loan down. Above it, investing ends ahead; below it, paying the loan does. It is lower than the loan's own cost when the lender charges for closing early. Lenders quote a loan rate that is charged monthly, so we show your loan's cost counted yearly as well, to compare like with like.

Question 14

Do lenders charge for closing a loan early?

Accepted Answer

For floating-rate loans taken by individuals, banks and most regulated lenders cannot charge a prepayment or foreclosure fee. Fixed-rate loans, and loans from some lenders or taken in a business name, may charge about 2 to 5%. Your loan agreement says which applies to you. You can enter the charge in the tool to see how it changes the break-even.

Question 15

What is a Direct plan, Growth option, and why do you use it?

Accepted Answer

A Direct plan has no distributor commission, so its running costs are lower than the Regular plan of the same fund. The Growth option keeps the gains in the fund instead of paying them out, so returns are not distorted by payouts. We use Direct, Growth, open-ended funds so that every fund is measured the same way.

Question 16

Why do past returns not predict future ones?

Accepted Answer

Markets rise and fall, and a fund that did well in one period may do worse in the next. The same SIP started a few months apart can meet very different prices, which is why our Fund history page shows every start month and the effect of the start year. Past performance is not an indication of future returns.

Question 17

Why are closed or merged funds missing from your fund history?

Accepted Answer

Our records hold funds that exist today. Funds that were closed or merged into others are not included, which makes the funds shown look better, on average, than everything that was available in the past. Every tool that uses fund history says so next to the figures.

Question 18

What is an ELSS fund?

Accepted Answer

An ELSS (equity-linked savings scheme) is a mutual fund with a 3-year lock-in. Up to ₹1.5 lakh a year invested in it may be deducted under Section 80C if you choose the old tax regime, and gains are taxed when you sell. It is a market-linked investment, so its value can fall as well as rise. You can pick ELSS as the fund type in our SIP and Lump sum tools.

Question 19

Is this investment advice? Do you earn a commission?

Accepted Answer

No. FinResp analyses. You decide. We are an independent research platform: we do not sell funds or FDs, take bookings, or earn fees or commission from any bank or fund house, and no agent will call you. The tools show what each choice would mean in rupees using real rates and real fund history. They are information, not advice or a recommendation of any bank or fund.

Question 20

Where do the FD rates and fund data come from, and how often are they updated?

Accepted Answer

FD rates are collected by our team from each bank's published rates, with the date shown on every result. We re-check banks on a schedule: larger banks about weekly, smaller ones about every two weeks, and every bank after an RBI rate decision. Fund NAVs come from AMFI, the industry body, and are updated every day for the previous business day. Rates change without notice, so confirm with the bank before you book.

Question 21

Why can a bank's own calculator give a slightly different figure?

Accepted Answer

Banks compound interest on their own day counts and may round at different steps. We work out FD returns on exact dates and have checked the method against several banks' calculators, but a final figure can still differ by a few rupees. The bank's figure at the time of booking is the one that counts.

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