• Sat. Aug 20th, 2022

How to get best Fixed Deposit Interest Rate

Bynina chohan

Jul 14, 2022

A bank fixed deposit is one of the most popular risk-free investment schemes in India, offering higher interest rates than savings bank accounts. Fixed deposits are savings accounts where the account holder deposits a specific amount for a fixed period, and the bank offers interest on the deposit based on the tenure and amount of the deposit. FD rate of interest refers to the interest rates obtained from the bank on a fixed deposit scheme. 

The FD returns offered by banks and NBFCs are quite popular with investors since they offer the best interest rates and a secured return. Different names are used for fixed-rate deposits, such as ‘term deposits’ and ‘time deposits’. There are different types of FDs, where people invest a fixed amount for a predetermined period, known as the FD’s maturity tenure. After the maturity of the investment, the financial institutions return the principal amount invested plus the interest earned throughout the investment, known as FD returns.  

The FD returns, and interest rate on fixed deposits differ depending on the bank. The Reserve Bank of India regulates bank fixed deposits. Typically, bank fixed deposits offer lower interest rates than corporate fixed deposits but provide guaranteed returns. The interest rates on FD returns are very low and barely make up for the inflation rate. For many, the first choice when placing their money into a safe place is to park it in a bank fixed deposit.

Listed below are some tips on how to get the best interest rate on a fixed deposit

Rates for Special FDs

The bank fixed rate of interest charged on an FD has a fixed tenure ranging from seven days to ten years. It is very common for banks to offer a special tenure of, say, 444 days, 650 days or 700 days as well, offering slightly higher FD returns during such a period. Interest rates are available, such as monthly, quarterly, half-yearly, or cumulative.

FD option for senior citizens

There is always a 0.5 percent additional interest rate for senior citizens regarding fixed deposits in all the banks. Moreover, suppose the term of the FD is more than five years. In that case, special bank fixed deposit schemes are available under which senior citizens will enjoy an additional interest rate over and above the current rate of 0.50 percent on their FDs. There will be an additional interest rate of 0.80 percent or more on deposits over 5 years. So senior citizen saving scheme is one of the best fixed deposit scheme for senior citizen.

Sweep-in FD is the best option

The interest rate on savings accounts is very low in most leading banks. A sweep-in deposit is a savings account in which any amount that exceeds a certain threshold limit in the saving account is automatically converted into a fixed deposit. So, you make more money than you would be earning in a savings account because you are effectively earning a higher interest rate. Additionally, if you have insufficient funds in your savings account to meet your needs, you can withdraw the money from your FD without breaking it.

Consider a tax-savings FD

If you are looking to park your funds in a bank FD and want to get the best FD Returns and want to save taxes, then you can do both simultaneously. A 5-year tax-saving fixed deposit that qualifies for tax benefits under Section 80C of the Income Tax Act can be very advantageous. A person may invest a maximum of Rs 1.5 lakh in a 5-year tax-saving fixed deposit with a bank for tax benefits within a financial year. The deposit rules stipulate that such deposits cannot be partially or prematurely withdrawn because the lock-in period is five years. Still, you may choose whether to receive interest payments on either a monthly or quarterly basis. 

Laddering is important

It is a good idea to spread your FD amount across different tenures. Over a longer period, the trend tends to be downward, but predicting short-term movements is not easy. When investing in FDs, it is best to use the laddering approach to mitigate the reinvestment risk and ensure liquidity in the long run. 


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