Index Of The Blog
Rates FD Schemes 2020 in India
Fixed deposit schemes are popular as one of the safest investment instruments. Anyone who is a resident, part of HUFs (Hindu Undivided Family), NRI, firm owner, or running a charitable trust can invest in a fixed deposit scheme in India.
You can use a fixed deposit investment for wealth creation by investing in cumulative FDs or you can invest in non-cumulative FDs for ensuring a regular income flow through interest payouts. However, the FD interest rate should be high enough to generate enough interest in either of the cases.
To get the highest FD rates in India, you can follow these tips:
Choose company FD over Bank FD
- Though banks provide a better FD interest rate than a savings account, the current economic situation and repo rate cuts done by RBI have impacted the interest rates negatively. This along with reduction in interest rates of small savings schemes have been a cause of great worry among the investors.
- However, you need not think too much about it as you can still get a high growth rate for your savings by investing in a corporate FD. Company FDs are fixed deposit schemes offered by NBFCs and offer at least 1 to 2 percent of additional interest rate than bank fixed deposit schemes.
- For example, Bajaj Finance is offering 7.35% interest on its FDs whereas bank FDs provide interest rates only up to 5.5%. You also get a 0.10% extra interest rate on booking an online FD.
Also, if you are a senior citizen, you can earn an additional 0.25% interest rate benefit. A flexible tenor between 12 and 60 months can be selected for your FD. This makes it suitable for both long and short term investments.
Note: For comparing interest rates of different banks and NBFCs you can use a fixed deposit calculator.
Systematic Deposit Plan
- If you do not have enough savings to book an FD right now then you can easily invest in an SDP (Systematic Deposit Plan) which is a first-of-its-kind feature introduced by Bajaj Finance FD. SDP allows you to deposit a small amount (starting from Rs. 5000) every month for a tenor up to 60 months.
- At most, you can make 48 deposits and the minimum deposit limit is 6. This means that you even get the option of choosing the number of deposits as per your financial requirements. Once the SDP matures, you will continue to receive returns every month depending on the number of deposits that you had made. By investing in an SDP your deposits earn at an interest rate that is prevailing on each deposit date.
You can also club the interest and principal amount of all the deposits and invest it in a cumulative FD of longer tenor for multiplying the returns.
To ensure surplus returns through an FD, you should also check the terms of investment such as:
Premature withdrawal
- Banks and finance companies will charge a penalty if you break an FD or withdraw a partial amount before maturity. This penalty can result in a deduction of 1 or 2% in your interest earnings.
- Therefore, before investing in an FD that you are interested in, you must check its penalty charges as well. Alternatively, you can seek a loan against FD, such as in the case of Bajaj Finance FD. The loan amount can be up to 75% of your fixed deposit value. The loan is processed quickly as minimum documents are required for loan approval. This means there is no need to break or withdraw a partial amount even if there is a financial emergency.
Fixed deposits are popular because they are safe and offer better interest rates than a savings account. Cumulative FDs are ideal for wealth creation whereas non-cumulative FDs help you to generate a fixed income to meet your regular expenses. It is necessary to look out for better paying FDs in both cases. Bank FDs are not as high as they were a year ago as banks had to lower their rates due to economic crisis and repo rate reduction. However, you can still multiply your savings at a fast pace by investing in corporate FDs such as Bajaj Finance FD that are offering interest rates up to 7.35%.
