A fixed deposit is an instrument that provides assured returns to an investor after locking-in a particular amount for a fixed period.
The tenor, FD interest rate, and some other features depend on the FD type and financier you choose for depositing your savings. However, you also need to focus on some other aspects before investing in an FD. Let’s discuss some of these aspects in detail now:
You need to choose the FD tenor wisely because if you need to withdraw an FD prematurely due to some sudden expenses, you will be charged a penalty and this reduces the interest earned by your deposits.
Therefore, it is better to go for financiers who offer the flexibility of tenor and charge a minimum penalty on premature withdrawals.
The interest calculation depends on the FD type and tenor. To calculate the interest easily, you can use an FD amount calculator that shows the interest and final maturity value based on your inputs and choice of FD plans.
Periodic interest payouts
You can withdraw the accumulated interest and deposited amount directly at maturity by investing in cumulative FDs.
Also, you can get the interest periodically by opting for a monthly, quarterly, six-monthly, or yearly interest payout. For that, you will have to invest in a non-cumulative FD that offers multiple choices when it comes to interest payout.
Senior Citizen FDs
Some banks and finance companies offer a higher interest rate on their Senior Citizen Fixed Deposit Scheme. Therefore, you can benefit from this additional interest rate if you are a senior citizen.
For instance, Bajaj Finance offers a 0.25% extra FD rate for senior citizens and this helps them to earn better returns. Also, you can open a fixed deposit account online by using an online FD form.
FD interest rates
The interest rate that is applicable on an FD varies from bank to bank. The bank FD rates have been decreasing in recent times because the RBI reduced the repo rate and took a few other measures to increase liquidity in the economy.
To grow your investments at a higher rate you can invest in company FDs that provide better interest rates than bank FDs. Bajaj Finance offers interest rates up to 7.35% on its FD plans. This is 1-2% higher than regular bank FD rates. You can invest in one of its FD plans to ensure higher returns post maturity.
Though FDs are considered to be risk-free instruments, it is always better to check the credibility of the issuer before investing your money. The recent economic conditions underline the need to check the stability ratings of FD plans.
Bajaj Finance FD has received MAAA/stable rating from ICRA and FAAA/stable rating from CRISIL which are the highest ratings that ensure the safety of your deposits.
Systematic Deposit Plan
You can also invest in a monthly deposit option called Systematic Deposit Plan that allows you to deposit a fixed monthly amount (starting from Rs. 5000) every month.
The number of deposits can vary from 6 to 48. Also, you can choose a tenor up to 60 months in such a way that all the deposits will mature on a single date or each deposit will mature after completing its tenor (which is the same for all the deposits).
This choice has to be made by you as per your financial requirements. The interest rate that prevails on the deposit date will be applicable for every deposit under the SDP plan.
Fixed deposit plans are offered by banks, NBFCs, and post offices as well. However, to continue growing your deposit at a higher rate, you can invest in NBFC FD such as Bajaj Finance FD that is offering interest rates up to 7.35%. You should also consider other factors like tenor, stability, interest payouts, liquidity options, etc before investing in an FD plan. For making your decision easy most banks and finance companies offer an FD monthly payout calculator on their portals that calculates your returns in advance. You can also invest in Systematic Deposit Plan from Bajaj Finance to invest in FD on a monthly basis starting at Rs. 5000 per month.