Fixed deposits (FDs) are a type of financial investment offered by banks and other financial institutions, where an individual can deposit a lump sum of money for a fixed period of time, typically ranging from a few months to a few years, and earn a fixed rate of interest on the deposit. One of the advantages of FDs is that they are considered to be a safe investment option, usually backed by government guarantees up to a certain amount. Although FDs provide the option of premature withdrawal, it may come with a penalty fee, and the interest rate earned may be lower than the original rate agreed upon.