How Can You Avail The Best Fixed Deposit Interest Rate?

Growing your hard-earned money for your future is challenging, especially when new to the financial world. There are also many investment options available. Still, you should make sure to understand everything, analyse those and discover the one which best suits you. Comparing it to the other methods of investment in a fixed deposit is something safe and convenient. 

A fixed deposit will help you when you suddenly require a high sum in your hand that you don’t want to waste. Fixed deposits do not depend on the market for their returns, so you can get assured returns with those investments.

A fixed deposit, also commonly known as FD, is an investment tool that you can use to deposit your lump sum for a fixed tenure of time for a fixed rate of interest. However, a fixed deposit is the best option when you get a lump sum and save it for your future.

And, it is also essential that you don’t cancel your fixed deposit until your tenure ends or you will be charged with a penalty. So it is always best to follow the tenure structure of the investment and make great use of it for increasing your income savings. 

Opening a fixed deposit account has become a more convenient and flexible option because of the fast-moving internet world. There are both online and offline methods with which you can easily open your fixed deposit. Both financial institutions and NBFCs in India are providing options for fixed deposit investment to save your hard-earned money for your future. 

Perks of increased online facilities with financial services are:

• You can easily make use of your accounts at any time, anywhere.
• You can also apply for deposits easily online.
• You are eligible for PIDM protection.
• You can also easily find out the needed details about your deposits online.

How Does A Fixed Deposit Work?

A fixed deposit is a lump amount that is invested for a fixed time for a fixed rate of interest. The investment cannot be withdrawn before the tenure period without paying the penalty, so it can be a lot helpful in making you save more. Each deposit will have a certain lock-in period. You cannot withdraw the fixed deposit even with paying the penalty towards it. 

The fixed deposit interest rates vary from one financial provider to the other. The interest rate for the fixed deposit changes depending upon the tenure we choose for making our investment, so you should analyse your financial status and choose the one that best suits you and has a higher interest rate.

Benefits Of A Fixed Deposit: 

Here are some benefits of a fixed deposit which you need to know before you apply for a fixed deposit investment

Getting the best FD interest rates:

The interest rate on Fixed Deposits varies from one financial institution to the other. First, you must check your financial institutions’ websites for the interest rates on different tenures. However, sometimes, you could earn a higher interest rate when you are extending your tenure by even a day. So, select a tenure that offers you the best Fixed Deposit interest rate.

Maximising FD returns:

The best way to maximise returns from your FD is to allow compounding to work its magic on your investment. When you open an FD account, you can choose between monthly or quarterly interest pay-outs and reinvestment of interest. However, to increase your return, you can also choose the reinvestment option. In this option, your interest amount is reinvested in the FD. You can also start to earn interest. 

Loan Against Fixed Deposit:

It has a flexible investment option that will work well with your financial situation when it comes to Fixed deposits. You will not need to cancel your fixed deposit when there is any sudden financial crisis that will make you lose the benefit of your fixed deposit. You also have the option of getting a loan against your fixed deposit when you are looking for funds. However, with this option, you will be able to get benefits for your fixed deposit investment and can also get your financial needs fulfilled within a lower interest rate.

Facility For Liquidity Of Money:

You have an option for pre closing your fixed deposit before your tenure, but for that, you will have to pay a certain amount as a penalty towards it. So always make sure that you don’t do it rather than choose to get a loan against your fixed deposit when you have financial needs.

Lower Risk Levels:

In a fixed deposit, there is an investment that has very minimal risk factors, and your money will remain safe with your financial provider until your tenure ends. The deposited amount will never get lowered when you withdraw your investment at the tenure end. So if you are a person who doesn’t want to take a risk, then this is the best option for you. 

Holding on to the end:

A Fixed Deposit is best when it is held up to the end of its tenure. One, you should allow your money to compound and, second, you also have to avoid premature withdrawal charges. You may also be tempted sometimes to liquidate your FD to meet short-term cash flow needs. However, always remember premature withdrawal will attract penalties. It is a better option to opt for an overdraft against Fixed Deposit. You can also get up to 90% of your FD amount as an instant overdraft. You can also use as much of it as you need to meet your cash flow while your FD continues to earn interest uninterrupted. The best thing when it comes to an overdraft against FD is that you must pay interest only on the amount that you use and not on the overdraft amount sanctioned.