What’s the difference between NSC and FD?

Two widely trusted investment options are Fixed Deposit (FD) and National Savings Certificate (NSC). Both are time-tested, come with low risk, and ensure steady returns for you in the long run. However, picking between the two can often be difficult.

Learn about the differences between these two financial products so that you can make the right choice while investing your money:

What are FD and NSC?

• Fixed Deposit (FD) is a low-risk financial instrument offered by banks, NBFCs, and post offices. Customers make a one-time payment for the chosen tenure, and this earns them interest at a fixed rate throughout the tenure of the scheme.
• National Savings Certificate (NSC) is offered by the Government of India as part of the Indian Postal Service’s savings scheme. It is a savings bond with a maturity of five years and is a good scheme to reduce tax liability.

NSC vs FD: Key differences

Parameter	National Savings Certificate	Fixed Deposit
Tenure	5 years	7 days to 10 years
Maximum investment	No limit	No limit
Loan benefit	Can be used as collateral against loans	Can be used as collateral against loans
Tax liability	TDS is not applicable	10% TDS is deducted on interest earned
Interest rate	Usually higher than FD at around 8%	Slightly lower than NSC (6%-8%)
Compounding frequency	Annually	Quarterly (in most cases)

NSC vs FD:

Which is the better choice?

Both FD and NSC are low-risk and secure investment options. They share several common features, including tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act.

Interest rates on FD and NSC are fixed throughout the tenure, and neither has a cap on the maximum amount that can be invested. So, the selection is a personal choice that can vary from individual to individual.

To know which one is better for you, use the FD calculator vs NSC calculator

Open a Fixed Deposit with Mahindra Finance today and enjoy lucrative interest and several other benefits. Visit our website to learn more.

Additionally For more information on the different types of FD's and RD's check out our detailed guide on FD vs RD.

Additional read: FD vs RD: Which One Should You Choose?