5 Essentials: Going Beyond The Fd interest Rate

[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] F [/yt_dropcap] ixed deposits are a popular financial instrument when it comes to investments over land, gold, or other property assets, thanks to one of the highest interest rate on Fixed Deposit. The amount of risk involved with a fixed deposit is almost negligible and makes for a better investment when compared to investing in other venues. The best fixed deposit rates in India and high returns on investment only add on to the popularity of a fixed deposit.

1.Safe Investment

The fact that fixed deposits have a fixed rate of interest, or one that varies in small amounts ensures that the losses, if any, are kept to a minimal. Additionally, your fixed deposits are provided with an insurance of up to Rs. 1 lakh. If your principal amount is quite high and you feel that the insurance amount is insufficient, you can choose to split your FDs across several financial institutions and claim an insurance on each of them. With the help of an FD interest rates calculator, you can get a clear picture of how best to split your funds.

2.Return on Investment

With an interest rate ranging from anywhere between 4–11%, you are entitled to a high return on your investment. Private banks and NBFCs offer a high rate of interest, but the risk factor involved is also slightly higher when it comes to corporate fixed deposits. If your FD has a short term maturity period, you probably can avail a rate of interest as that of a conventional savings account. Senior citizens are entitled to an additional 0.5% on their FD’s rate of interest. Compare FD rates before you make a decision and decide on the principal amount and tenure period of your FD.

3.Flexible holding Period

Once you have done a quick check on the fixed deposit rates comparison in India, and identified the best interest rates on fd, the next task at hand would be to choose a suitable tenure period for the maturity of your fixed deposit. Most banks and NBFCs offer a maturity term that can last anywhere between seven days to 10 years. Some financial institutions offer a term of up to 20 years as well. So, depending on your financial situation and stability, you can choose a convenient tenure period.

4.Loan Against Fixed Deposit

Despite planning and managing your finances way ahead in time, there can arise a situation of a cash crunch. While breaking the FD might seem like the ideal solution, you will end up losing on your savings with the penalty or the decrement in the rate of interest appended to early withdrawal. You could opt for a personal loan against your fixed deposit and avail a low rate of interest, while keeping your FD safe. Additionally, you can receive an overdraft of up to 90% of the principal amount to get your finances straight.

5.Tax Benefits

Banks and NBFCs can deduct TDS from your FD interest rate, if your savings per year exceeds Rs. 10,000. To obtain a tax exemption, you can submit Form 15G or H and stop lenders from deducting taxes on your FD. You also have tax-saving fixed deposits where the amount is locked in for a term of five years. No early withdrawals are possible with such FDs that allow you to claim tax deductions under the section 80C.

Fixed deposits are a great choice with their stability, security, and high returns on interest. You can avail several such benefits with a fixed deposit and make your money grow. Ensure you do a thorough research on the best Fixed deposit interest rates and additional features before choosing a fixed deposit that best suits you.