Travelling is one of lifeโs greatest pleasures. It opens up new experiences and memories that you canโt get by staying at home. But letโs be honestโtravelling costs money. Many of us put off our travel plans because of the expenses involved. With rising inflation, itโs important to invest our savings wisely to achieve our life goals, including travel.
The good news is, you donโt have to postpone your travel plans forever. There are smart ways to fund your vacation without affecting your regular savings. One of the best options is a fixed deposit (FD). In this article, weโll explain why a fixed deposit is a great choice for planning your travel.
What is a Fixed Deposit?
A fixed deposit (FD) is an investment where you put a fixed amount of money for a fixed period at a fixed rate of interest. When the tenure ends, you get back your invested amount plus the interest earned. Banks and non-banking financial companies (NBFCs) offer FDs. The returns are not linked to the market, making FDs one of the safest investment options.
Why Choose FD for Your Travel Plan?
1. Earn Interest on Your Money
When you book an FD, banks and NBFCs offer a fixed interest rate. This rate is usually higher than what you get in a regular savings account. In a regular FD, interest is paid every quarter. If you want to grow your savings faster, you can opt for a compound or reinvestment FD. In this type, the interest is added to your principal, so you earn interest on the interest too.
You can also invest in company deposits offered by housing finance companies or NBFCs, which sometimes offer higher interest rates.
If you plan your travel a few years in advance, you can book an FD that matures around your travel date. This way, your money earns interest and helps reduce the pressure of managing travel expenses.
2. Assured Returns
The biggest benefit of an FD is that it offers guaranteed returns. No matter what happens in the market, youโll get the promised interest. For example, if you book an FD at 6% for one year, youโll get 6% on your investment, regardless of market conditions.
3. Varying Tenures
Fixed deposits come with flexible tenures. You can choose a tenure that matches your travel plans. If youโre planning a trip 30 months from now, you can book an FD for exactly 30 months and earn the best possible interest.
4. Flexible Investment Amount
Most banks and NBFCs allow you to start an FD with as little as โน10,000. Thereโs no upper limit, so you can invest as much as you want. Even if you can save โน10,000 a month, you can book an FD and start building your travel fund.
5. Instant Liquidity
When planning a vacation, the exact travel dates are often not fixed until you book tickets and make other arrangements. You need access to your funds when the time comes. With an FD, you can withdraw your money anytime, though a small penalty may apply for premature withdrawal. This gives you instant access to your funds when needed.
Final Thoughts
Planning a vacation is exciting, but itโs important to plan your finances well in advance. A fixed deposit is a safe, flexible, and reliable way to save for your travel. It offers guaranteed returns, flexible tenures, and instant liquidity. By starting your FD early, you can build a corpus for your dream vacation without affecting your regular savings.
So, if youโre thinking of taking a vacation, start planning today with a fixed deposit. Itโs a smart way to make your travel dreams come true!
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