The recent policy rate hikes proposed by the RBI has brought in a new wave of hope for FD investors. This is because the new changes have helped banks, due to which they have altered the FD interest rates.
So, if you are planning to invest in an FD, then you should start investing now to seek better returns, thanks to the lucrative interest rates.
How to choose the best issuer?
The best way to choose an issuer or financial institution for an FD investment is by comparing the FD interest rates on offer based on the tenor you choose and the safety parameter attached with the offering.
Based on the recent revision of interest rates PSU banks offer interest in the range of 6.70-6.85%. On the other hand, private and foreign banks offer interest in the range of 7-7.25%. However, NBFCs offer the best FD interest rates in this regard. So, use the FD calculator to compare various issuers and FD offerings to invest in a FD of your choice based on the maturity value you choose to achieve.
Ready to go with the best financial institution, keep the following points in mind while making the final decision for your FD investment.
- Safety: Fixed deposit offerings by financial institutions, be it banks, NBFCs or companies come with a safety rating. A list of credit rating agencies in India give these ratings to FDs based on the overall credibility of a fixed deposit issuer. CRISIL is one such notable credit rating agencies that rates FDs on a scale of FAAA to FD. So, check the safety parameters of an FD based on its credit rating and choose the one that has the highest rating to secure a trustworthy high return for your investment.
- Premature withdrawal terms: Faced with an immediate financial need, you may have to withdraw funds partially or fully from your FD investment before it reaches maturity. This untimely withdrawal will require you to pay a premature withdrawal penalty on your investment. The amount for this penalty varies across financial institutions.
However, the penalty can be substantially high in case of some issuers and can as a result affect the overall interest calculation of your FD and thereby can reduce your principal also. So, plan for uncertainties and check the premature withdrawal rates before deciding on an issue.
- FD terms and variant: You can invest in a cumulative FD or a non-cumulative FD based on the way you want to access the interest on your investment. In case of cumulative FDs, you can access the interest along with the principal only at the end of the maturity tenor. On the other hand, you can access the interest earnings from your non-cumulative FD at regular intervals. So, choose a FD variant based on your needs and financial preference but remember to select a trustworthy financial institution.
Fixed Deposits comes with an FAAA/Stable rating from CRISIL. They are one of the most trustworthy companies in India today, so you can invest without any fear of losing your invested amount and gain from high earnings of 8.40% to 8.75% on your investment.
Equipped with these terms, devise a strategy and proceed to invest in FDs with an issuer of your choice to get high returns on maturity.