This is a product most understood by investors. Amount remaining in the bank account as savings is converted into fixed deposits. Banks however offer an interest which is not able to beat inflation. As a result, over a period of time the real value of savings lying in bank fixed deposits tend to be lesser in value. For eg. if bank interest rate is 5 % and inflation is 7% then the real earning will be 6.4 % less than actual i.e. 0.32 % reduction. In case of company fixed deposits, the returns are in the range of 8-9 % hence a 0.32% reduction due to inflation will still give a better return.

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