Fixed Deposit / Term Deposit is a savings product where you invest a specific amount of money for an agreed fixed duration. Banks offer you profits based on both the amount you have committed as well as the duration. The money you chose to invest in a Fixed Deposit / Term Deposit is not readily accessible like the way it is in a ‘Savings Account’. Therefore you should be careful to decide how much you are comfortable in investing and the duration of your investment.
There are a number of benefits that you gain from investing in Fixed Deposits / Term Deposits; they are risk free, they offer better rate of return / profit than regular savings accounts, and also help in safeguarding your money against inflation. Once you have a sizeable investment, it can supplement your income as well.
Here are a few basic concepts that about Fixed Deposits you should know before you start investing.
Comparebanks.com makes browsing for Term Accounts simple, quick and reliable. You get all you need to know in one window, where you can make easy comparison between various banks, their rates, terms and conditions.
This refers to you terminating your Fixed Deposit / Term Deposit before your tenure is completed. Your bank will charge you a penalty and / or a service charge as per their schedule of charges when you do this. Profit is also calculated and adjusted when you withdraw prematurely from a term account. Detailed profit calculation is shared below.
For instance you invest PKR 100,000.00 for 12 Months starting January 2014. The bank has offered you 10% profit rate per annum where the profit is calculated quarterly and paid quarterly.
Here we will assume you DO NOT terminate your term deposit early. In this case every quarter you will receive = (100000*10/100)/4 = PKR 2500 every quarter, a total of PKR 10,000 per annum.
Here we will assume you terminate your deposit 3 months before maturity. In this case you will receive =(100000*10/1000)/4 = PKR 2500 for 3 quarters only Minus your termination fees.
Be mindful of government taxes, Withholding tax and Zakat which is deducted as per policy of Govt. of Pakistan.
It is not necessary for you to have a long term relationship with the Bank in order to deposit your money. Most Banks will open an account within a day and will be happy to deposit your money as soon as they can
After Using Comparebanks you can decide which bank you would like to invest with. Once you select the offer, the bank’s representative will call you and guide you to the closest branch.
Yes as per the rules of the Government of Pakistan the Banks will deduct a withholding tax. This tax rate is different for tax payers (10%) and different for non-taxpayers (15%). For example if your profit comes of PKR.1,000, the bank will deduct PKR 10 as withholding tax (in case the customer is a tax payer)
Yes as per the rules of the Government of Pakistan Zakat has to be deducted. However you can submit a declaration instructing the bank not to deduct Zakat for your account.
Drive you dream car today, find out all you need to know about Car Financing and Calculate instant monthly installementsFind out more...
Start building your dream home today, find out all you need to know about Home Financing and get instant quotesFind out more...