Corporate FD

What is corporate FD?

Now you can make a fixed deposit with a company and fetch higher returns than bank fixed deposits. Corporate fixed deposits are similar to bank fixed deposits wherein you make a one-time payment for a fixed period of time. 

Since corporate FDs are insecure in nature, you must ensure your investments are in safe hands. Make sure to check the company ratings before investing in corporate FDs, so that the company does not default on your payments. 

Why invest in corporate FDs? 

Higher interest rate: The best option is you want to make a slightly higher interest rate. During inflation, corporate FDs can provide higher returns. 

Safety through ratings: Only companies with AAA ratings are allowed to provide FDs. Thus, an investment in corporate FD of high rating is safe. 

Benefits senior citizens: A senior citizen gets a higher interest rate on deposits made in Corporate FDs. 

Bank corporate FDs: You can also opt to invest in Corporate FDs of reputed banks. NRI’s can also invest in corporate fixed deposits. 

How do corporate FDs work?

Corporate fixed deposit works in a similar fashion as bank fixed deposits. When compared to bank fixed deposits, they offer a higher interest rate and help generate more returns. Corporate fixed deposits do not contain a sovereign guarantee and are risky. The company fixed deposits are not backed by insurance cover so there are chances of losing money if the company goes bankrupt. So, to remain on the safer side invest in corporate FD which has high credit ratings.