How Bank FD Can Help You in a Cash Crunch?

Thu, 06 May 2021 06:13:35 +0000

The Buyt Desk

Coronavirus pandemic has played havoc on our finances. Cities are under lockdown, streets are empty, health infrastructure is crumbling down and people are losing jobs. Data from the Centre of Monitoring Indian Economy (CMIE) showed that 73.5 lakh people have lost their jobs due to the second wave of coronavirus. In a situation like this, a sudden requirement of money could arise for anyone. The easy way out is to get a personal loan. Lots of banks offer this instant personal loan which is approved instantaneously. But they do come at a cost. The interest rate on these personal loans ranges anywhere between 16-20%. But if you have a Fixed Deposit (FD) in a bank this could come to your rescue. You need not break the FD prematurely but can avail of a short term loan against your FD.

What is the benefit of taking a loan against FD?

You can take a loan against your FD. The interest on a loan against FD is also much lower as compared to a personal loan. Many banks are currently giving loans at less than 6% interest on FD. Taking a loan against FD is much cheaper than a personal loan. You can take a loan by paying only 1 or 2% more than the interest on FD. Currently, the returns on bank FDs range from 4 to 6%. In that scenario, you can get a loan at an interest rate of 6-8 per cent. However, don’t forget that the loan amount will be decided based on the value of your FD. That means you can take a loan up to 90-95% of the value of FD. For example, if the price of your FD is Rs 4 lakh then you can get a loan of up to Rs 3.5 lakhs.

How to get a loan against Fixed Deposit?

You can also apply online for Loan Against Fixed Deposit. Most banks have given this facility online. Apart from this, it can also be applied by going to the bank branch. The good thing is that it is a secured loan because you pledge your FD as security thus banks also do not hesitate in giving this loan.

Top 5 Banks and the rate at which you will get the loan

Bank	Rate of Interest	Loan Value
State Bank Of India	1% above the FD rate	Up to 90% of FD value
Punjab National bank	1% above the FD rate	Up to 95% of FD value
ICICI Bank	2-3% above the FD rate	Up to 90% of FD value
HDFC Bank	2-3% above the FD rate	Up to 90% of FD value
Axis Bank	2 % above the FD rate	Up to 85 % of FD value

Credit card Against FD

You can also apply for a credit card against your FD. Apart from a loan against your FD, you can also avail the facility of taking a credit card against FD. This credit card will have a credit limit ranging from 75- 85% of the value of the FD. But you must have an FD of at least Rs 25,000 to avail the facility of a credit card.

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Do Not Forget to Report FD’s Earning

Tue, 13 Apr 2021 15:56:43 +0000

The Buyt Desk

Fixed Deposit is by far one of the favorite ways of saving in India. In an FD you invest your money to earn interest on your interest for a fixed period of time. One of the greatest advantages is that you receive a guaranteed return on your investment. FD is also liked by many because it is considered to be quite far away from the fluctuations of the stock market. However, it is very important to keep some things in mind while investing in an FD especially as far as taxes are concerned.

Never forget this information

If you have opened an FD in the name of a minor child or your wife, the return will be taxable. The interest earned from this is added to your income and you will have to pay tax. While filing the income tax return, the interest received must be mentioned without fail. It is considered your income and you will be taxed according to the tax slab applicable to the total income.

How to report interest income?

Banks deduct TDS at the end of every year while depositing interest in FD account. But even if your bank has deducted TDS on the return received from the FD, it will have to be reported in the income tax return. There is a column at the time of filing the income tax return, where information about income from FD has to be given. Interest earned from FD is mentioned in the tax credit statement of Form 26AS. If you do not show interest in your IT return, then there will be a mismatch in your return filed and 26AS which could result in an Income Tax notice.

How much tax will be levied?

Normally banks deduct 10% TDS on income from interest, but if you fall in the tax slab of 20 or 30% then you will have to pay additional tax. If for some reason the bank is not deducting TDS on the interest of FD, you should still add it to your income and pay tax. If you do not do this, when the FD matures, then you may have to pay a large amount of tax.

Form 15G/ 15H

If your taxable income is nil and you don’t want your bank to cut your TDS then you can fill self-declaration form 15G and request your bank for not to deduct TDS. Banks deduct a TDS if the interest of more than Rs 40,000 is earned from a bank deposit. This limit is Rs 50,000 for senior citizens. The senior citizen can make the request for no TDS deduction by submitting self-declaration form 15H.

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fd Archives -

How Bank FD Can Help You in a Cash Crunch?

The Buyt Desk

What is the benefit of taking a loan against FD?

How to get a loan against Fixed Deposit?

Top 5 Banks and the rate at which you will get the loan

Credit card Against FD

Do Not Forget to Report FD’s Earning

The Buyt Desk

Never forget this information

How to report interest income?

How much tax will be levied?

Form 15G/ 15H