How to Choose Among Fixed Deposit Rates in India

Investing for the future is a very good idea, and people in India have always had a healthy tradition of saving funds for future requirements. Now, with so many investment options available, you might just get confused as to which one to choose.

If you are young enough, you could invest some funds in the share market and other instruments that involve certain risks but provide high returns to offset the effects of inflation. However, you still need to choose some very safe investments options to ensure that a large amount of your spare funds are available to you in the future, irrespective of market fluctuations and other factors.

Fixed Deposits

Fixed Deposits are term deposits where you deposit a certain amount with a financial institution and agree to leave the amount untouched for a certain period of time. At the end of this period or term, you will get your deposit back, and also earn an additional amount on it as the interest paid by the organization with which you had opened the deposit.

Mostly, people choose banks or NBFCs to deposit their funds with, as these come under the regulations of the RBI. You can also choose corporate fixed deposits which usually offer some of the highest FD rates in India.

Highest Interest Rates on Bank Fixed Deposits

When you decide to look for FD schemes, do some research first. You can find numerous resources online that provide detailed information on fixed deposit schemes offered by various banks and other financial institutions.

You can look at the Fixed Deposit rates in India offered by financial institutions on these websites. You can do a comparison of FD rates and other features of the different schemes, and carefully pick a few that are attractive to you. Some online tools even allow you to calculate the actual value in Rupees of the maturity amount after factoring in inflation rates.

When comparing Fixed Deposit rates in banks, you should also go through other features of the scheme like FD foreclosure penalties. Many FD schemes also allow you to take a loan against the deposit amount if you are in need of emergency funds. This is a good feature to look for, as it provides an alternative to premature closure of deposit which can involve penalty charges and loss of interest.

Know about How to Make your Fixed Deposit Yield More Returns

Plan your Deposits Well

Let’s say you’ve set aside an amount that you want to invest in FDs. After checking out the latest Bank FD Interest Rates in India, pick a few schemes with banks, NBFCs, or even some safe corporate deposit schemes. Spread your investments over several smaller deposits, do not put down all your funds in one huge deposit.

Choose different tenures for your deposits. Longer tenure deposits generally pay higher interest rates than short term deposits. So, choose a few long term deposits that come with high FD rates, and also open a few short term deposits to provide quick access to cash if the need arises. Special schemes like Tax-Saving Fixed Deposits and Special Fixed Deposit Schemes can get you higher returns on your investment.

Fixed Deposits are safe schemes to hold your spare funds while still earning a reasonable interest on the invested amount. Fixed Deposit rates in India differ based on various factors like deposit scheme, tenure, and the type of financial institution (bank or NBFC). Company FDs earn more interest but they are risky.

Read About: Comparative Assessment of Bank and Company FDS

You can look at the CRISIL and ICRA ratings of these corporate schemes to assess their trustworthiness before making a decision.