The term 'fixed' here denotes tenure. Fixed Deposit, therefore, presupposes a length of time for which the depositor decides to keep the money with the Bank and the rate of interest payable to the depositor is decided by this tenure. Rate of interest differs from Bank to Bank. Generally, the rate is highest for deposits for 3-5 years. This, however, does not mean that the depositor loses all his rights over the money for the duration of the tenor decided. Deposits can be withdrawn before the period is over. However, the amount of interest payable to the depositor, in such cases goes down.

Tips to the depositor:

1. Decide in advance, the period for which you are not likely to need the money.
2. Banks pay interest depending upon their need for long or short money. Shop around for the best rate of interest available.
3. Avoid Banks which do not have a sufficiently long history
4. If you need a part of the money before your deposit matures, seek your banker's advice whether taking an overdraft will be beneficial.
5. You need to be very careful while entrusting you money to finance companies which promise lucrative rates of interest