A fixed deposit to invest your funds is a good idea if you wish to have a regular source of income. It’s also a tried and tested way to invest, ensuring you earn a certain amount of wealth on maturity. Nonetheless, while choosing to place your capital in a bank FD, you should always check interest rates that different banks offer and select your FD accordingly.
What is Fixed Deposit?
It is integral for you to know how a fixed deposit or a bank FD works so you can reap the benefits. Essentially, a fixed deposit lets you grow a principal amount of money over a fixed tenure at an interest rate which is fixed. The preset interest rate doesn’t get affected by fluctuations in the economy. Hence, this is a way to invest your wealth with guaranteed returns. You can opt to get interest payouts at regular intervals on a monthly, quarterly or bi-yearly (even yearly) basis. You can also choose to get a full payout of the interest earned at the time of maturity (at the close of your FD tenure). If you opt for a premature withdrawal of funds, you may have to pay a penalty.
Features of a Bank FD
A fixed deposit you choose with a bank has certain advantages and features you should know about before selecting one. These are listed below:
- You get assured returns, while your money is safely invested.
- There is zero risk of the loss of the principal.
- Your wealth earns more in a bank FD than if kept in a regular savings account.
- FDs can be renewed in an easy manner.
- You can manage your expenses on a monthly basis with FD interest payouts.
- Bank FD interest rates are higher for senior citizens. Interest rates offered by any given bank can be conveniently calculated by a bank FD calculator, online, available on any bank’s portal.
The Best Bank FDs
It is quite important to have a rigid plan for your finances and to keep your budgets in place, which is why you may be compelled to place your wealth in a bank FD. For many reasons, such as diversifying your portfolio, it can prove to be a great option, especially for cutting down the risk of investment. In 2021, if you want to invest in an FD offered by a bank, there are many choices. Furthermore, currently, banks are offering decent interest rates on 3-year tenure FDs. At any rate, the interest earned for a 3-year tenure is higher than that for a tenure of a year or 2 years. Besides this, in a 3-year tenure, you may take a calculated risk by placing funds in an FD for a moderate amount of time. In case interest rates spiral up, your principal is only blocked for a 3-year period after which you can renew it with the potentially higher interest rate. Here are some of the best bank FDs (and remember that interest, according to your tenure and principal amount, can be calculated with a bank FD calculator) in 2021:
- Yes Bank – With Yes Bank, regular clients get an interest rate of 6.50% and seniors get 7.00%.
- ICICI Bank – A popular bank, ICICI Bank gives you an interest of 5.15% and if you’re a senior citizen, the interest payout is at a rate of 5.65%.
- Laxmi Vilas Bank – At a considerably lower interest rate than banks in this list, regular citizens get 4.75% and seniors get 5.25%. However, when compared to other famous banks, these rates are still higher. In case you want to prematurely withdraw your funds, a low penalty of 1% is charged. Nonetheless, this penalty does not apply on deposits exceeding Rs. 1 crore.
- Punjab and Sind Bank – Regular citizens get an interest rate of 5.30% and seniors can earn at a rate of 5.80%.
- Fincare Small Finance Bank – Attractive interest rates of 6.30% are offered to regular investors and 6.80% offered to senior citizens. Several flexible interest payouts are offered and options for premature withdrawal are available too.
What’s Is in Your Interest
While checking out a bank FD, it’s not a bad idea to go with reputed banks offering you a decently high rate of interest. Even if the bank offers you a lower rate, you are sure your money is secure with a well known bank.