Fixed Deposit Rates: Everyone Needs To Know About
A fixed deposit is much more advantageous than other investments as they provide a higher rate of interest as compared to a regular savings account. The capital in the fixed deposit cannot be withdrawn until the maturity date.
People usually prefer fixed deposits over others as it is inclusive and independent of fluctuating market rates and stock indices, making it easier to supervise.
Being one of the most selected investment parkways, it is preferred by investors of all age groups. Talking about today’s scenario, where stock markets have subsequently dropped down, there has been no deduction in fixed deposits. In fact, it has soared up by over Rs. 2.8 lakh crores, during the lockdown.
Reasons to choose fixed deposit:
- One of the most popular stable forms of investment with bound returns until the maturity period.
- Higher rates of interest when compared to other savings accounts or investing options.
- During times of emergencies, one doesn’t need to apply for personal loans, instead opt for a loan against a fixed deposit.
- It is adaptable, that is, one gets an option to deposit any amount of sum within a term of 7 days to 10 years.
Mostly people prefer to invest according to the fixed deposit interest rates. The interest rates affect investment in the following ways:
- The savings financed in fixed deposit earn interest according to the amount invested as per the pre-decided interest rate proposed by the issuer. Higher growth of savings can be earned on locking up to elevated interest rates.
Even if the issuer changes the rates, one still continues to earn the same rate of interest as decided pre-hand on the particular savings. It also remains unaffected by any change in the market rate.
Factors which affect the fixed deposit interest rates:
- The interest rates largely depend on the issuer and vary from one to another. Generally, the interest rates offered by NBFCs and other firms are much higher than those offered by banks or post office FDs.
- For a few years, RBI has focused on increasing liquidity in the economy, thereby reducing the fixed deposit interest rates numerous times. This has brought the repo rates down, which has exerted downcast pressure.
- The interest rates also depend on the term the savings has been invested for. Longer tenure would lead to elevated rates of interest, whereas shorter tenure would mean lower rates of interest.
- The interest rate also varies according to the payouts. If the payout is during the maturity period, the rate of interest is generally high as compared to situations where people choose periodic payouts, where the interest rate is likely to reduce.
- The issuer generally offers a higher rate of interest on fixed deposit to senior citizens, their workers, and for prevailing clients.
- Higher Fixed deposit interest rates are also offered on renewing deposits as a renewal bonus.
The average rate of interest offered by the financiers is 5-6%. However, there are certain firms like Bajaj Finance Fixed deposit which might offer lucrative interest rates up to 7.60% for fresh customers and an exceptionally high rate of interest for prevailing clients up to 7.70%. They offer even higher rate of interest for senior citizens up to 7.85%. A renewal bonus of 0.10% on the existing rate of interest is also offered on renewing the deposits.
Calculation of fixed deposits:
A new online feature called a fixed deposit interest calculator had been introduced by a few firms like Bajaj Finance, which helps their clients to calculate and analyze their plan for investments in advance.
This can be easily accessed by the customers by simply filling out a few details like payout terms, interest rates, investment sum, etc. After this, the interest applicable pops up on the screen within a few seconds.
With the help of this calculator, one can easily speculate monthly interest, maturity amount, date, and tenure, etc.
In addition to this, the clients get the opportunity to compare and contrast various firms in the market to find their best choice according to their requirements within a few minutes.
One can choose a period between 12 months to 60 months as well as their interest payouts during the maturity. Existing customers get the opportunity to invest online from their homes while it is not so difficult for even fresh customers, which can be easily availed.