The interest rate becomes the deciding factor while choosing an instrument because it reflects the rate at which an investment grows. A fixed deposit accrues interest at a fixed rate over its tenor and therefore, it is natural for you to be curious about the interest rates offered by different FD schemes.
Fixed deposits are offered by banks, non-banking financial institutions, and you can even deposit in post office deposit schemes. The highest post office FD interest rate is 6.7% and it is offered by POTD (Post Office Time Deposit). On the other hand, bank FDs on an average are only providing interest rates up to 5.5% in 2020. For higher growth of savings, you can invest in corporate FDs that offer better interest rates. For instance, you can invest in a Bajaj Finance fixed deposit plan as it offers FD rates up to 7.35%.
However, interest rate is not the only thing that determines how good an FD is. As a smart investor, you must also consider these things before investing in a particular FD plan:
Minimum deposit amount
- Bank usually allow you to start an FD plan with Rs. 10,000 or more. The minimum deposit amount varies from bank to bank but you require to invest a sufficiently large corpus to earn a substantial interest.
- If you want to deposit an amount as small as Rs. 5000 every month and still enjoy all the benefits of an FD, then you must invest in an SDP i.e. Systematic Deposit Plan. It is introduced by Bajaj Finance and allows you to earn the interest that is prevailing on the date of each deposit.
- A tenor up to 60 months can be set for these deposits and the number of deposits can vary between 6 and 48 as per your financial planning and obligations. This is a beneficial deposit scheme for those who have just started earning but want to grow their savings at a high rate.
Comparing FD plans and calculating returns
- The FD interest rates differ from bank to bank. Factors like FD tenor, frequency at which interest payout is requested by you, and the FD type that you have invested also determine the interest rate. For example, financiers tend to offer a higher interest rate if you choose a longer tenor.
- Moreover, the tenor range, interest rate, investment method, etc. vary as per the FD scheme chosen by you. You can use an FD rate calculator if you want to analyze all these things of different fixed deposit plans in a short span.
- FD rate calculator can be found in the websites of most financiers. The primary purpose of using an FD calculator is to calculate the returns offered by various FD schemes. It not only gives you a clear idea about a particular FD plan but it also lets you know what is the interest rate for fixed deposit plans.
You can open a fixed deposit account by either visiting a bank or finance company or you can visit their respective websites for opening an account online. Online account opening process is more convenient as you do not have to wait in queues for completing the formalities.
Bajaj Finance provides an online procedure that is complete in itself. This means that you not only can fill an online FD form but you can also submit the form and documents via internet and manage your FD account online. You also earn an extra interest rate of 0.10% upon utilizing the online procedure for investing in an FD. CRISIL and ICRA have rated these fixed deposit plans highly for their stability and safety. Therefore, you do not have to worry about the safety of your invested amount.
The interest rate of an FD determines your returns that you can expect once it matures. You can go through the fixed deposit interest rates offered by different Financiers and calculate the interest and returns with the help of an FD calculator.
You can also consider factors like deposit amount, tenor range, investment method, etc. before choosing an FD plan. For growing your investments at a higher FD rate you can opt for company FDs like Bajaj Finance FDs that offer interest rates up to 7.35%. These FDs offer an extra 0.10% on booking an FD online and also ensure safety of your investment with high credit ratings from ICRA and CRISIL.
You can invest in an FD and save up on your taxes. According to the income tax regulations, an interest amount of up to Rs. 5000 is free from taxation if you have invested in a company fixed deposit. In case your total taxable income, including your FD interest, is lower than the basic exemption limit, you can simply fill and submit the 15G/15H to avoid TDS deduction.
You can invest in an FD online from the comfort of your home. All you need to do is fill out an online Fixed Deposit form and apply for an FD scheme that meets your financial goals. So, you no longer need to wonder what is a fixed deposit!