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Risk return

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(Querist)
31 August 2013 why are the interest rates of fixed deposit more than savings account? if mr.A and mr.B have the same balances for the same amount of time mr.A in a fixed deposit and mr.B in savings a/c? why is it that mr.A receives more interest? the depreciation of money for both must have been the same.. the inflation rate so the time valueof money for both is the same... then why does one get more interest in an fd than a savings a/c? IS IT THAT MORE RISK IS INVOLVED IN CASE OF AN FD? so the bank compensates with interest?
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
04 September 2013 Fixed deposits interest are fixed and need to be paid on maturity, how ever savings account deposits are rate fixed but it will be flexible based on your use of amount in the account. but fixed deposit is commitment for the fixed period and bank can use the funds freely for that period, but savings account not like that, so interest rates are more for FDs

For bank deposits are risk free investments only which gives the minimum rate of return
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
04 September 2013 Fixed deposits interest are fixed and need to be paid on maturity, how ever savings account deposits are rate fixed but it will be flexible based on your use of amount in the account. but fixed deposit is commitment for the fixed period and bank can use the funds freely for that period, but savings account not like that, so interest rates are more for FDs

For bank deposits are risk free investments only which gives the minimum rate of return
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