Many people find company deposits lucrative due to the higher rate they pay on the FDs as compared to bank FDs. However this high return also comes with high risk. The major risk in case of a company FD is that if the company is unable to repay your money, you end up losing it. But in case of banks, your money is safe as the bank FDs are insured up to Rs. 1 lakh. So in case the bank becomes insolvent, you are sure to get your money back.

So how do you protect yourself when investing in company FDs? For one, opt for bank FDs having a credit rating of at least A+. These ratings are given by rating agencies like ICRA and CRISIL. A+ ratings implies the FD is safe.

Find out the company’s record in making repayment on time. Check the company promoters’ record. E.g. it is always better to opt for FDs from companies like Tata and L&T. Stay away from companies with unknown promoters, even though they may be offering higher rate of interest.

Follow these tips to ensure your money in company FD is safe.