Many people invest in FD thinking that they get guaranteed returns and the money is also safe. But in reality, your money is not 100% safe even in Fixed Deposit. There are some risks in it too. There are some other things related to FD, about which the banks themselves do not give information to the investors. But you must know these things before investing in it. Know 5 such things here-

How safe is the money?

Although the money is safe in FD, if the bank defaults in any condition, then only up to 5 lakh deposits of the investors remain safe because DICGC guarantees insurance of only up to Rs 5,00,000 on bank deposits. Apart from this, it is also worth noting that this guarantee is not only for the FD money but a total amount of Rs 5 lakh is insured by combining the amounts of all savings accounts, current account, FD, RD, or other schemes. If you have invested more than this in the bank, then that money will be lost.

Tax on interest
The government charges you tax on the interest received on FD. While filing ITR, the interest received on FD is counted as income. Nowadays there are many such schemes on which you get better interest than FD and also get tax exemption.

Same interest
Once you get an FD done, you get the same interest on it for the entire tenure. You do not get even a rupee more than that. In such a situation, many times there is a loss in getting FD for a long time. If the bank increases the interest rates in the meantime, then also you do not get the benefit. And if you have to pay tax on the interest after this, then there is more loss.

Penalty on pre-mature withdrawal

There is a liquidity issue in bank FD. If you break the FD before time, then you have to pay a pre-mature penalty on it. What will be the penalty amount on FD, it can be different in banks. Usually, this penalty is between 0.5%-1%. If you have invested in a tax-saving FD, then you can withdraw it even before the period of 5 years. But in this case, you do not get tax exemption.

Better options than FD are available.

The interest that is received on FD in today's time is not very high. Most banks give interest between 6 to 8 percent on FD. If it is very high, a bank can offer up to 9 percent interest. But you would hardly have heard of more than this in today's time. But you can get much better interest than this in mutual funds. There is market risk in mutual funds, but if you invest in it through SIP, then this risk is reduced significantly. People have been seen getting 15 to 20 percent returns in mutual funds.