Bank FD vs Corporate FD: Know the Key Differences, Benefits, and Risks Before You Invest

In middle-class families, saving the money left after monthly expenses and earning from those savings is a significant support for the future. Fixed deposits remain the most reliable option for people seeking additional income. Many choose to invest in fixed deposits at banks or the post office. At the post office, schemes like the National Savings Certificate or Kisan Vikas Patra, which double the invested amount in 10 years, are particularly popular.

Both bank FD and corporate FD will give good returns

Those who are a little more financially savvy compare the interest rates of different banks and make a fixed deposit in the bank that gives better returns.

Why People Choose Bank FDs

Many people compare the interest rates of different banks and choose the one offering the best returns. Bank FDs are regulated by the Reserve Bank of India, making them a safe and reliable investment option.

The Risk with Corporate FDs

Corporate FDs tend to offer higher returns than bank FDs. However, the main concern is the risk of default by the company issuing the FD. If the company defaults, the investor may have to undergo a lengthy legal process to recover the money. Additionally, corporate FDs are not insured, increasing the risk.

Safe Corporate FDs: How to Minimize Risk

Investing in corporate FDs with a high credit rating from reputed agencies can make the investment safer. These corporate FDs offer higher returns but come with a higher level of risk.

Bank FDs vs Corporate FDs: The Bottom Line

Bank FDs provide lower returns but come with low risk, while corporate FDs offer higher returns but come with higher risk. A balanced approach, investing in both types based on your risk tolerance, can be a wise strategy.