If you are planning on investing in a Fixed Deposit, start by comparing FD interest rates in order to find the banks that give you the best Fixed Deposit rates.
Fixed Deposits are extremely popular investment instruments in India because of their greater safety and reliability. They also offer higher interest rates than savings accounts. When you deposit a sum of money into a FD, you are assured of getting your returns at the end of the maturity period. You also know that the interest rate will not be influenced by the market. It will stay locked-in for the entire tenure of your FD, so there will be no fluctuations in the interest generated.
This low-risk investment vehicle is used by a large number of Indians across the country. Yet, many of them do not know how to get the highest interest rates in order to get the best returns. In fact, the biggest misconception that exists is that many people think that banks are the only organizations that offer Fixed Deposit schemes. Therefore, their search for the best rates is limited to banks.
You may be surprised to know that there exists an alternative, which may actually give you better returns than banks. Many financial institutions and Non-Banking Finance Companies (NBFCs) allow you to invest your money into Fixed Deposits with them. In most cases, they offer better interest rates than banks.
So How are Fixed Deposit Rates Determined?
Banks and companies are usually free to determine the FD interest rate that they wish to pay the investor. However, there are certain factors that are taken into consideration when deciding on the numbers.
All organizations take the competition into the account. They study the current interest rate environment, check what rates others are offering, and then set their own. The Reserve Bank of India (RBI) also have a major influence on determining the prevailing interest rates. The RBI changes its policies depending on the state of the economy. When there is excess money in the market, interest rates on FDs are lowered. Conversely, when there is a shortage of funds, rates are increased to encourage more people to invest their money into FDs so that it eventually flows into the economic system.
Interest rates also depend on the duration of your tenure. Banks and companies usually have higher interest rates on FD for senior citizens, and have schemes for minors and students which come with special benefits.
How to Find the Best Fixed Deposit Rates?
If you are wondering how to find the best interest rates in the current market, then the first thing you need to do is browse the interest. Find out what different banks and NBFCs have to offer. There are many financial websites that have comparison lists to help investors select which organizations are best suited for them to invest in. Some websites also keep track of the changes in interest rates over time, which helps you make a more informed decision.
Making the Choice
Say you want to get a fixed deposit for a tenure of one year. On searching the web for all the Term Deposit Interest Rates 2016, you will find lists of banks and companies, along with their interest rates. You now have to browse through the information to narrow down on the entity that best suits your needs.
The best Fixed Deposit rates for 1 year in India vary from between 9.25% for 12 to 18 months, to 8.14% to 8.24%, depending on the principal amount. Some banks and NBFCs offer 7.95% and 7.9% on their Fixed Deposits. .
Remember to check for the best company Fixed Deposit rates for the year 2016. This way you’ll get an idea of how much these rates differ from bank Fixed Deposit rates. Once you get the numbers, just compare them to see where you stand to gain the most.
Now you have to decide if you want to put your savings in a bank FD or in a company Fixed Deposit. Once you do that, the next and final decision is to choose the bank or NBFC that gives you the best returns. Now go ahead and deposit your savings with them. All of this can actually be done online, without you ever having to visit the bank or office.
Now that you know about the types of Fixed Deposits and how to find the entities that give you the best Fixed Deposits rates in India, start your own research and maximize the returns on your hard-earned money!