Corporate FD vs Bank FD: Key Differences and Similarities

Corporate FD vs Bank FD: Overview

To facilitate a comparison between company FD vs bank FD, here is a table outlining the differences between the two:

Particulars	Corporate FD	Bank FD
Interest rates	Comparatively higher	Comparatively lower
Tenor	Generally ranges from 12 months and ten years	Range from seven days to ten years
Risk	Comparatively higher risk for the investor	Low-risk investments and come with security of up to ₹5 Lakhs by DICGC
Withdrawal charges	No charges are levied if you withdraw funds from your corporate FD after 3 to 6 months from the date of investment 2-3% charges may apply if you withdraw after 6 months	Banks charge around 0.5%-1% penalty on premature withdrawal of funds.
Tax benefits	Corporate FDs do not have any tax benefits	Tax-saving FDs allow investors to claim deductions of up to ₹1.50 Lakhs under Section 80C of the IT Act

Similarities between Corporate FD and Bank Fixed Deposits

While corporate FDs differ from bank FDs in many ways, there are also some similarities. These include the following:

1. Guaranteed Returns

While corporate FDs can provide higher returns compared to bank FDs, both of them offer guaranteed returns. As both of them have a fixed interest rate, you get to know the amount you will get at the time of maturity.

2. Higher Rates for Senior Citizens

Like bank fixed deposits, corporate FDs also offer marginally higher interest rates to senior citizens. This makes both types of fixed deposits an ideal investment tool for retired individuals.

3. Flexible Tenor

As mentioned above, the tenor of corporate FDs and bank FDs can extend up to 5 years and 10 years. Hence, both these types of FDs offer you the flexibility to choose a tenor that best suits your financial requirements.

Things To Consider When Choosing Between a Corporate FD Vs Bank FD

When comparing a corporate FD vs a bank FD, consider the following points to make a well-informed decision and prioritise your financial well-being.

1. Define the Purpose of Investment

For short-term goals, bank FDs may be an ideal option. Their lock-in periods are shorter and interest rates are competitive, leading to better returns.

2. Evaluate the Market

Interest rates for bank FDs have declined over the past few years. Lower interest rates may result in returns that are inadequate to combat inflation. So, it is important to do the due diligence before you decide to invest.

3. Review All Your Options

Along with interest rates, tenor, and lock-in periods, you must look at all the other benefits, penalties, and attributes of the options available. This helps you compare the returns of corporate FD vs bank FD instruments before zeroing in on an investment avenue.

Final Thoughts

The bank FD vs corporate FD assessment is a good way to identify value, but remember that both have pros and cons. Regardless of the issuer, fixed deposits are a trusted avenue of investment.

You can browse for the right FD on Bajaj Markets. With a quick and easy online process, you can not only find the best options but also invest just as easily.

Fixed Deposit and Other Investment Comparisons
Bonds Vs FD	FD Vs RD	NPS Vs FD
Certificate Of Deposit Vs Fixed Deposit	FD Vs Real Estate	PPF Vs FD
Debt Funds Vs FD	Fixed Deposit Vs Life Insurance	Short Term FD Vs Long Term FD
ELSS Vs FD	Fixed Deposit Vs Savings Account	SIP Vs FD
Equity Vs Fixed Deposit	Liquid Fund Vs FD	Sukanya Samriddhi Yojana Vs FD
FD Vs NSC	MIS Vs FD	Time Deposit Vs Fixed Deposit

Are corporate fixed deposits safe?

If you compare bank FD and corporate FD, you will find that the latter has a higher risk factor as they are unsecured.

Is a fixed deposit the safest investment?

FDs are considered one of the safest forms of investment as they offer assured returns.

Do bank FDs and corporate FDs have the same interest rate?

No, the interest rate offered on corporate FDs is generally higher than bank FDs. However, comparing corporate FD vs bank FD interest rates is advisable before you decide on any of them.