The fixed deposit interest rate depends on the duration for which you are depositing funds and also vary from issuer to issuer for the same duration. FD returns for senior citizens are typically higher. The type of FD – cumulative FD or non-cumulative FD – also affects the FD interest rates. Fixed deposit rates in India with banks are between 5-6.5% only but some NBFCs such as Bajaj Finance offer higher interest rates than banks i.e. up to 7.35%.
Despite the subsequent reduction in FD interest rates by banks, there is no dip in deposits. Fixed deposits are the preference of most people who want to grow their savings safely because the rate of returns on these reliable instruments, once fixed, do not fluctuate due to economic conditions like stock indices. Even if the issuer decreases the FD interest rate, your invested funds continue to earn interest as per the pre-decided rates locked when you opened an FD account. Following are the factors that help get the best FD rates and increase the returns on your FD investment:
• Deposit Tenor
The tenor you select impacts FD interest rates. Usually, a longer duration brings higher interest rates and interest rate is low for shorter tenors.
• Interest payouts
The interest rates on cumulative fixed deposits are higher where interest is paid at maturity. If you choose periodic payouts on non-cumulative fixed deposits like monthly, quarterly, half-yearly or annually, interest rates on your FDs are likely to be lower.
• Investment Mode
Financiers like Bajaj Finance offer 0.10% additional interest rate benefit if a customer invests in the fixed deposit online.
• Investor category
FD interest rates also depend on the customer category. All issuers offer higher FD rates to investors above 60 years. Most financial institutions offer a higher interest rate for their employees and existing customers also.
• Renewal Rewards
Many FD issuers offer rewards on auto renewal of fixed deposits. For instance, Bajaj Finance offers 0.10% additional interest percentage to depositors renewing their fixed deposits.
• Laddering of deposits
If you split your investment amount into multiple FDs having different tenors and interest rate bucket, you can gain maximum returns in a scenario where interest rates are fluctuating.
Investors are suggested to avoid premature withdrawal of their fixed deposits. It will lead to lower returns as premature withdrawal will be penalized by the FD issuer. Instead, they can apply for a loan against fixed deposits which is an easy way to fulfil their need without penalties.
Earn Higher Returns
Bajaj Finance FD offers one of the highest term deposit interest rates and has earned the highest safety ratings FAAA/Stable by CRISIL and MAAA (stable) by ICRA that increase the credibility and trustworthiness among investors. You can use the FD rate calculator to estimate maturity amount and interest on your fixed deposits.
Let’s estimate the returns on an FD of Rs.20,000,00 invested by a senior citizen investor with Bajaj Finance for 36 months. Using the FD rate calculator, following results are obtained:
Step 1: Go to www.bajajfinserv.in
Step 2: Products>Fixed Deposits and Investments>Calculator
Step 3: Choose Customer Type>Enter Investment Amount>Enter Investment Tenor
That’s it. The results will be on the screen as follows for Cumulative fixed deposits:
Interest rate: 7.35%
Interest payout: Rs. 4,74,208
Maturity by: Oct 2023
Maturity amount: Rs. 24,74,208