Know About FD Interest Rate Before Investing in a Fixed Deposit

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Know About FD Interest Rate Before Investing in a Fixed Deposit

FD is the most preferable investment venture for most of the investors’ reason being the unparalleled level of security provided by these deposits. If you are also thinking about investing in FDs then this article is for you.

Before you do invest in FDs have a look at the important things you should know about FD interest rates:

Varying Interest Rates

There are 2 major factors on which the interest rate i.e overall yield of your FD depends: the tenure of your FD and the financial institution you choose to invest with.

FD Tenure: Rate of interest on FDs depend upon the tenure of FD you choose to invest for. Higher the tenure of your FD higher the interest rate you will get. FD tenure ranges from 7 days to 10 years which you can choose according to your specific goals and objectives. For instance: Bajaj Finance FDs offer 7.40% interest on FDs with 12 – 23 months tenure, while the rate of interest for 48 – 60 months tenure FD is 7.60%.

Choice of the Institution: Every bank and NBFC offer a different rate of interest on FDs. The higher the interest the higher will be your returns so avoid banks & NBFCs who offer low-interest rates or do not provide flexible tenure options. Generally, NBFCs like Bajaj Finance (Non-banking financial companies) outperform banks in terms of the FD interest rate. You can start investing in Bajaj Finance Fixed Deposits with a minimum deposit amount of Rs. 25,000 and enjoy interest rates up to 7.85%.

Interest Calculation

So many investment options in FD might cloud your judgement in picking the best FD plan or provider. Which is why it is very important for you to determine your FD interest and maturity amount even before you start investing.

A Fixed Deposit Calculator helps you calculate and compare your receivable interest amount conditioned to different combinations of the deposit amount, tenure, and interest payment frequency. Your FD interest amount i.e the returns on your Fixed Deposit is dependent on the following factors:

  • Principle amount or deposit: High interest comes from high deposits.
  • Deposit tenor: Longer the tenor higher would be the interest.
  • Rate of interest: A high percentage of interest rate offers a big amount of interest.
  • Types of fixed deposit i.e Cumulative or non-cumulative: Cumulative FDs are preferred for greater interest.
  • Frequency of interest payout: You can compound your interest on per month, quarterly, half-yearly, or on an annual basis with Bajaj Finance Fixed Deposits. However, compounding your interest rates frequently might decrease the amount of interest.
  • Type of customer (Senior citizen, new and existing customer): Senior citizens are favoured over regular customers and get higher FD interest rates.

    Since there are these many factors to be considered, an online tool like Bajaj Finance FD calculator is highly recommended for easy calculation of your FD interest amount. It also provides you with the total maturity amount saving your time involved in the manual work.

Types of fixed deposit and interest payout options

There are 2 types of fixed deposits namely Cumulative and Non-cumulative. The major difference between a Cumulative and non-cumulative FD is in the interest payout option. In case of cumulative FDs, a lump sum amount will be received after the maturity whereas for non-cumulative FDs you get fixed interval payout.

Interest earned in a Cumulative FDs will be higher than non-cumulative ones because of the power of compounding. Although non-cumulative FDs are preferred by senior citizens as a source of regular income.

Bajaj Finance Fixed Deposits provide you with the flexibility of choosing between both the types.

Fluctuation in FD interest rates owing to economic factors

The economic conditions of the country, along with monetary and fiscal policy, makes a considerable impact on the Fixed Deposit rates.

Recently, on March 27 2020, RBI declared a rate slice for the Reverse Repo Rate by 75 basis points. The banks followed the suit and bit by bit diminished FD interest rates.

Money related markets have gotten profoundly unstable because of the recession. So accordingly, RBI and the central government are taking measures to keep monetary markets from freezing up because of illiquidity.

So, before investing in Fixed Deposits it is very important for you to know the latest highest FD rates. Here are some of the reputed banks & NBFCs in the table below providing the best FD interest rates in India.

NameTenure of 1 yearTenure of 3 yearsTenure of 5 years
Bajaj Finance7.40%7.50%7.60%
SBI5.25%6.00%6.25%
ICICI4.00%6.5%6.5%
Citi Bank3%5%5%
Axis Bank3.5%6.7%6.7%
HDFC Bank3.5%6%6%
Canara Bank4.20%6.20%6%
HDFC Bank3.5%6%6%
IDFC First Bank4%4.5%4.6%

As shown in the table above Bajaj Finance offers higher interest rates in comparison to other banks. So, at this time of financial crises, investment with Bajaj Finance is a more profitable option.

Benefits of investing in Bajaj Finance FD

Apart from one of the best FD rates in India, Bajaj Finance FD provides additional benefits such as:

  • The facility of loan against deposit
  • Online application and maintenance of FD account
  • Allows premature withdrawal, and
  • Auto-renewal facility

With ICRA’s MAAA (stable) rating and CRISIL’s FAAA (stable) rating, Bajaj Finance term deposit is the most secure option to park your savings. Besides, they offer higher Fixed deposit rates for Senior Citizens. The interest rate for senior citizens is up to 7.85%.

Up to 75% of the deposit amount can be availed as a loan on a very nominal rate of interest while you keep earning interest on the rest of the FD amount. So why wait, start investing and start earning!

FD is the most preferable investment venture for most of the investors’ reason being the unparalleled level of security provided by these deposits. If you are also thinking about investing in FDs then this article is for you.

Have a look at a few things you should know about FD interest rates:

  1. Varying Interest Rates: There are 2 major factors on which the interest rate i.e overall yield of your FD depends: the tenure of your FD and the financial institution you choose to invest with.
  2. Interest Calculation: A Fixed Deposit Calculator helps you calculate and compare your receivable interest amount conditioned to different combinations of the deposit amount, tenure, and interest payment frequency.
  3. Types of fixed deposit and interest payout options
    There are 2 types of fixed deposits namely Cumulative and Non-cumulative. In case of cumulative FDs, a lump sum amount will be received after the maturity whereas for non-cumulative FDs you get fixed interval payout.
  4. Fluctuation in FD interest rates owing to economic factors
    The economic conditions of the country, along with monetary and fiscal policy, makes a considerable impact on the Fixed Deposit rates.

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