When it comes to safe investments, there is no doubt about the fact that a fixed deposit is a very attractive option since it provides safety coupled with steady growth. Some fixed deposits also go so far as to offer income tax benefits on the amounts invested in them each year. However, there are times when the people who invest in fixed deposits need to maintain constant access to that investment so as to be able to augment their monthly income. Taking these needs into consideration some banks offer specific fixed deposits that are known as monthly income plans and help augment their monthly income.

What is a monthly income fixed deposit?

What a monthly income fixed deposit is basically a fixed deposit that can be created and earns an interest in much the same way a regular fixed deposit does with a few differences. The being that with a monthly income plan the investors either have access to the amount deposited or are paid the interest earned on a monthly basis. Some banks even let depositors withdraw the interest every month from regular fixed deposits at discounted interest rates. The monthly income plans are generally linked to a bank account and the interest earned is credited into that account.

Features of the monthly income fixed deposit

While the features of these accounts can vary from one bank to another, a general set of features that you may see with these accounts are:

• There is a minimum and a maximum amount that can be deposited in these accounts.
• Offer the option of monthly, quarterly or half yearly income plans.
• These products come with credit ratings that form a good indicator of how good the plan is.
• These deposits allow for premature withdrawals to be made from them.
• Almost all deposits provide nomination facilities.
• The duration of these deposits can go all the way up to 10 years.
• Permit depositors to withdraw as much as 95% of the amount deposited.
• These deposits come with overdraft facilities on the savings/current accounts linked to them and any excess money needed by the account is withdrawn from the FD.
• With no TDS is deducted by the banks on the interest earned.