Fixed Deposits (FDs) are a great investment option that helps individuals save money and earn substantial interest on the invested amount. For low-risk investors prioritising capital preservation, FDs are a suitable choice as they offer guaranteed returns.
A high-interest rate on FDs can help individuals achieve a good return on investment over the investment duration. These rates depend on the issuer, the deposit amount, and the tenor chosen.
Refer to this table to know the interest rates that various issuers offer on fixed deposits:
|
FD Issuer |
Regular Citizens (p.a.) |
Senior Citizens (p.a.) |
|
Ujjivan Small Finance Bank |
3.75% - 8.50% |
4.25% - 9.00% |
|
AU Small Finance Bank |
3.75% - 8.00% |
4.25% - 8.50% |
|
ICICI Bank |
3.00% - 7.20% |
3.50% - 7.75% |
|
YES Bank |
3.25% - 7.75% |
3.75% - 8.25% |
|
Axis Bank |
3.00% - 7.20% |
3.50% - 7.85% |
|
HDFC Bank |
3.00% - 7.25% |
3.50% - 7.75% |
|
State Bank of India |
3.50% - 7.00% |
4.00% - 7.50% |
|
Canara Bank |
4.00% - 7.25% |
4.00% - 7.75% |
|
IDFC First Bank |
3.00% - 8.00% |
3.50% - 8.50% |
Disclaimer: The fixed deposit interest rates latest as of 4th April 2024 and are subject to change as per the changes in the policies of the issuer.
Choosing a suitable fixed deposit option with a favourable interest rate is essential to generate high returns on one’s investment. Here are some key factors investors must consider to choose the right investment option:
Research and Compare Various FD Providers
The interest rates on fixed deposits vary across different financial institutions. Therefore, selecting the right provider offering competitive interest rates is crucial for maximising the returns on an investment. Individuals must create a list of FD issuers and collect data based on their current interest rates.
If one plans to invest ₹1 Lakh, check the monthly interest for a ₹1 Lakh fixed deposit of various issuers and choose one providing the highest rates. In addition to the interest rates, pay attention to the credibility of the issuer to ensure the safety of one’s funds.
Assess the Penalty Charges
An advantage of investing in fixed deposits is that individuals have the flexibility to withdraw the funds prematurely whenever needed. However, this facility may come with a premature penalty charge. It is important to know these charges beforehand.
This is because these charges can reduce one’s interest earnings slightly. So, look for an issuer that comes with lower premature penalty charges. In fact, some banks allow investors to withdraw their funds without levying any penalty.
Choose the Investment Tenor Wisely
Interest rates vary depending on how long investors choose to stay invested. The cardinal rule is that the longer one stays invested, the higher the returns. So, if individuals want to meet their long-term goals, opting for a longer duration will fetch them higher returns.
Most FD issuers offer special interest rates for a longer tenor. However, remember that investors may not be able to access their funds easily during that time. So, they must plan what they want to achieve with the FD earnings and pick a tenor that matches their financial goals.
On the other hand, if they choose a shorter investment tenor, the interest rate they receive will be lower.
Consider the Tax Implications
The interest that individuals earn on their fixed deposit investment is taxable. Therefore, it is essential to consider how taxes can affect the money earned through a fixed deposit interest. FD issuers usually display the interest rates that individuals earn before taxes.
However, the amount investors actually get after taxes depends on how much tax they have to pay. So, make sure to consider the tax implications while choosing the fixed deposit investment.
Note that investors can claim tax deductions on the income they earn through their fixed deposit interest while filing their income tax returns. This can help them avail some relief and save more.
Check for Special Offers
Occasionally, issuers offer special deals or better interest rates for certain fixed deposit amounts or investor groups, such as senior citizens or women depositors. This way, investors can get a higher interest rate on their fixed deposit.
Since these offers are available for a limited time, it is possible to miss out on them. Thus, investors must ensure that they keep an eye on these limited-time offers to benefit from these offers.
Armed with this information, individuals can choose the right fixed deposit option that matches their investment goals and financial situation. While the interest rate on FDs is an important factor to consider while choosing an FD, investors need to stay informed about other factors as well. This way, individuals can make the most of their investment and grow their finances securely.
Read Exclusive COVID-19 Coronavirus News updates, at MyNation.