How many fixed deposit accounts can you open? A guide to maximizing your savings

Fixed deposits (FDs) are a popular investment option for risk-averse investors, especially senior citizens who also get higher interest. They offer safety, assured returns, and flexibility. But, many people wonder how many FD accounts they can and should open.

The answer is simple. There is no limit to the number of FDs you can have. However, managing multiple FDs requires careful planning. Here’s what you need to know.

Why Open Multiple FDs?

Having more than one FD can offer several benefits:

1. Liquidity: Staggering FDs with different maturities ensures regular access to funds.
2. Flexibility: You can allocate funds for different goals, such as education, travel, or emergencies.
3. Higher Returns: Different banks offer varying interest rates. Opening multiple FDs allows you to maximise returns.
4. Tax Benefits: Some FDs, such as tax-saving fixed deposits, qualify for deductions under Section 80C of the Income Tax Act.

Also Read: Tax Reforms and System Overhauls: Important financial changes set to take effect in 2025

Factors to Consider Before Opening Multiple FDs

Before you start opening multiple FDs, keep these points in mind:

1. Purpose of Investment

Understand why you’re investing. If you’re saving for a short-term goal, choose an FD with a shorter tenure. For long-term objectives, opt for a longer duration.

2. Interest Rates and Tenure

It is good to check around the interest rates being offered by different banks.

Adhil Shetty, CEO of Bankbazaar.com, suggests, “Compare interest rates across banks. Even a small difference can significantly impact your returns, especially for larger amounts. Choose FDs with staggered tenures. This strategy ensures you have liquidity when needed without breaking an FD prematurely.”

3. Tax Implications

Interest earned on FDs is taxable. If the interest exceeds ₹40,000 in a financial year (₹50,000 for senior citizens), the bank deducts Tax Deducted at Source (TDS). Plan your investments to avoid crossing this threshold unnecessarily.

4. Premature Withdrawal Penalties

Banks charge penalties for premature withdrawals. If you have multiple FDs, you can withdraw from one without disturbing the others.

5. Nomination Facility

Ensure you nominate a beneficiary for each FD. This makes it easier for your family to claim the funds in case of unforeseen events.

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