Know the difference between Bank FD and Corporate FD, where will you get bigger returns?

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Know the difference between Bank FD and Corporate FD, where will you get bigger returns?
Know the difference between Bank FD and Corporate FD, where will you get bigger returns?

Bank Vs Corporate FD: There is no risk of any kind in FD in the bank. Fixed returns are available. On the other hand, in corporate FD, interest is higher than in bank. However, the risk remains. Let’s know where to invest to earn big money.

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Bank Vs Corporate FD: Whenever the talk of fixed deposit starts, people turn to banks. Just like banks, there is also Corporate FD. Corporate FD or Company FD is also known as Company Term Deposit. This is a fixed deposit scheme. In this, you get a little more interest than bank FD. Generally, non-banking finance companies offer corporate FD. However, it also carries a risk compared to bank FD. The reason for this is that this is a scheme offered by private companies.

Many investors face a dilemma while choosing between corporate FD and bank FD. Although both have the purpose of increasing your savings, but before taking a decision, it is very important for you to know some important differences between these two FDs.

Know what is Corporate FD

Just like bank FD is done in banks, similarly corporate FD is provided by corporate companies. This FD is provided by non-banking financial institutions. Corporate FD is like bank FD, but the interest rates in corporate FD are higher than bank FD. Companies launch FD to raise funds. The interest rates on these can be 1 to 1.50 percent higher than bank FD. The valuation of their fixed deposit scheme is done by many rating agencies including ICRA, CARE and CRISIL. They give rating on that basis. In these also, investment option is available for different tenures.

Why is there doubt on corporate FD?
Corporate FD is not insured. Hence the risk increases even more. The option of investing in corporate FD with good credit rating from reputed credit rating agencies can be considered safe to a great extent. In this way, bank FD gives low returns with low risk and corporate FD gives high returns with high risk.

Which is better, corporate or bank FD?
If you can take risk to get higher returns, then you can invest your money in corporate FD. However, before investing in corporate FD, it is very important to check the financial condition and reputation of the company. Apart from this, if you want safe investment, then you can invest your money in bank FD.

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