Things to consider before opening a Fixed deposit account

Posted by Felix Okoli on Monday July 7, 2014 at 9:7:5:

A fixed deposit is a type of account that allows you to deposit a sum of money for an extended period of time, which attracts high interest rate. Off all the types of account, fixed deposit is the most profitable as the interest rate paid on the amount deposited ranges from 10% to as high as 25%, and the interest is fixed, unlike that of stock that fluctuates. Some people even take fixed deposit account as a type of investment, but before you go ahead and open that fixed deposit account, there are some factors you have to put into consideration.

Things to consider:

- The Reputation of the Bank: This is the very first factor to consider. How reputable is the bank you’re planning to open an account with? How has the bank been faring in the previous financial years? The bank has to have a strong and credible reputable to avoid them going bankrupt with your money.

- The Interest Rate: this is one other factor to put into consideration before opening a fixed deposit account with any bank. Interest rates vary from bank to bank and it has to be higher than the usual rates used on savings which is what makes them an attractive form of investment The interest rate has to worth the investment and has to protect your money from losing value.

- Time frame: This has to do with the minimal time your money has to stay with bank before you can withdraw it. Check with the bank to know their length of commitment, and make sure that you will not need the money within that period of time.