Difference Between Callable & Non-Callable FD

People in India have long trusted Fixed Deposits (FDs) as a safe and reliable method of investment. FDs are a dependable choice whether you want to save for the future, purchase your ideal house or plan for your child's education. However, choosing the right type of FD is important to meet your specific financial needs.

Both callable and non-callable FDs are well-known options, each with unique advantages. Being aware of the differences between the two can help you make an informed choice that supports your financial objectives. Let's examine these two types of Fixed Deposits provided by ICICI Bank and their benefits so you can make the most appropriate choice for you.

Callable FD Explained

A callable Fixed Deposit gives investors the ability to withdraw their money before the maturity date, subject to certain restrictions and penalties. When needed, investors can liquidate their investments in this type of FD. People who want to earn decent interest while retaining accessibility to their funds can benefit from a callable FD. This type of FD offers a balance between the requirement for immediate access to money and the profitability of a long-term Fixed Deposit. 

Features and Benefits of a Callable FD

• Early Withdrawal Penalties

Although early withdrawal is possible with Callable FDs, it may incur penalties or charges. However, the options for early withdrawal provide a better financial set-up and an investor-friendly choice.

• Loan Provision

Like regular FDs, Callable FDs often include a loan facility that allows investors to borrow against their Deposit without prematurely closing it. This method can be a way to address the need for funds without resorting to high-interest loans or accumulating Credit Card debt.

Non-Callable FD Explained

A Fixed Deposit that prohibits early withdrawal before maturity is known as a non-callable Fixed Deposit (FD). The purpose of this feature is to provide the depositor with better interest rates. For people who are certain that they won't need the invested money until maturity, non-callable FDs are the better option. They are also a safe and dependable choice for investors looking for steady and increased returns. The non-callable FD offered by ICICI Bank is the Tax Saver FD in which the deposit is locked in for 5 years.

Features and Benefits of a Non-Callable FD

1. Higher Interest Rates

Non-callable FDs have higher interest rates than callable FDs. Without the danger of an early withdrawal, the bank / financial institution can use the money for a predetermined period.

2. Commitment to Fixed Tenure

You have to keep your funds locked in for a certain term while investing in non-callable FDs. This function guarantees financial discipline and helps in the methodical accumulation of your money over time.

3. No Premature Withdrawal

The prohibition on early withdrawals is the most important aspect. The deposit is locked in until it matures, guaranteeing that the investment fulfils its intended purpose.

4. Promised Returns

You are assured fixed returns based on the decided interest rate at the time of opening the deposit.

5. Safe Investing

Non-callable FDs are among the safest investment alternatives, just like other Fixed Deposits. They are a dependable option for investors who are risk-averse because these FDs are unaffected by market swings.

6. Perfect for Long-Term Objectives

These FDs are perfect for long-term financial objectives including retirement savings, children's education and future entrepreneurial aspirations.

Key Differences between Callable FD & Non-Callable FD

Conclusion

The decision between callable FDs and non-callable FDs should be based on your financial preferences. A callable FD can be a suitable option if you want liquidity to manage an unanticipated crisis. Non-callable FDs, on the other hand, are suitable if you want higher interest rates and disciplined savings. Selecting the option that best suits your financial objective is crucial because both alternatives address different demands. 

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