Anonymous
Jun 1
Difference between interest on fixed deposit and interest on bank overdraft ?
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ChatGPT
Jun 1
Interest on fixed deposit is the interest earned on the amount deposited in a fixed deposit account with a bank or financial institution. The interest rate is predetermined and fixed for the duration of the deposit.
On the other hand, interest on bank overdraft is the interest charged by a bank on the amount borrowed through an overdraft facility. The interest rate is usually higher than that of a fixed deposit and is charged on the amount overdrawn from the account.
In summary, interest on fixed deposit is earned by the depositor, while interest on bank overdraft is paid by the borrower.
On the other hand, interest on bank overdraft is the interest charged by a bank on the amount borrowed through an overdraft facility. The interest rate is usually higher than that of a fixed deposit and is charged on the amount overdrawn from the account.
In summary, interest on fixed deposit is earned by the depositor, while interest on bank overdraft is paid by the borrower.
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Google Gemini AI
Jun 1
Interest on Fixed Deposit (FD)
- Time-bound investment with a fixed interest rate for a predetermined period.
- Interest is typically credited quarterly or annually into the FD account.
- Principal and interest are paid out in a lump sum at maturity.
- Higher interest rates compared to interest on savings accounts.
- The interest rate is fixed at the time of opening the FD and cannot be changed during its tenure.
- Funds locked in for the FD period; premature withdrawals may incur penalty charges.
Interest on Bank Overdraft
- A loan facility that allows account holders to withdraw more money than their account balance.
- Interest is charged on the overdrawn amount only.
- The interest rate is higher than the interest rate on savings accounts, but lower than the interest rate on personal loans.
- The interest rate is typically calculated daily and charged monthly.
- The amount of overdraft and interest due is usually repaid in monthly installments.
- Overdrafts may be subject to additional fees and charges.
Key Differences
- Purpose: Fixed deposits are investment instruments, while overdrafts are loans.
- Time frame: FDs have a fixed term, while overdrafts can be open-ended.
- Interest rate: FDs offer fixed interest rates, while overdrafts have variable interest rates.
- Interest calculation: Interest on FDs is calculated on the principal amount, while interest on overdrafts is calculated on the overdrawn amount.
- Funds availability: Funds in FDs are locked in for the term, while overdrafts provide immediate access to funds.
- Penalty for withdrawals: Premature withdrawals from FDs may incur penalties, while overdrafts do not typically have penalties for early repayment.
- Time-bound investment with a fixed interest rate for a predetermined period.
- Interest is typically credited quarterly or annually into the FD account.
- Principal and interest are paid out in a lump sum at maturity.
- Higher interest rates compared to interest on savings accounts.
- The interest rate is fixed at the time of opening the FD and cannot be changed during its tenure.
- Funds locked in for the FD period; premature withdrawals may incur penalty charges.
Interest on Bank Overdraft
- A loan facility that allows account holders to withdraw more money than their account balance.
- Interest is charged on the overdrawn amount only.
- The interest rate is higher than the interest rate on savings accounts, but lower than the interest rate on personal loans.
- The interest rate is typically calculated daily and charged monthly.
- The amount of overdraft and interest due is usually repaid in monthly installments.
- Overdrafts may be subject to additional fees and charges.
Key Differences
- Purpose: Fixed deposits are investment instruments, while overdrafts are loans.
- Time frame: FDs have a fixed term, while overdrafts can be open-ended.
- Interest rate: FDs offer fixed interest rates, while overdrafts have variable interest rates.
- Interest calculation: Interest on FDs is calculated on the principal amount, while interest on overdrafts is calculated on the overdrawn amount.
- Funds availability: Funds in FDs are locked in for the term, while overdrafts provide immediate access to funds.
- Penalty for withdrawals: Premature withdrawals from FDs may incur penalties, while overdrafts do not typically have penalties for early repayment.
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