Short-term fixed deposits (FDs) are an excellent option for investors seeking low-risk, stable returns over a short duration. Typically, the tenure of these FDs ranges from 7 days to 12 months, offering flexibility while allowing your money to grow without long-term commitment.
Here’s a look at some essential tips for maximizing returns on short-term FDs in India:
Aslo Read– IIFL Finance Gold Mela: Get Gold loans at 0.99% interest rate pm, zero processing fees until…
Compare Rates
Interest rates on short-term FDs vary across banks and financial institutions. Smaller private banks and Non-Banking Financial Companies (NBFCs) often offer higher interest rates compared to major public sector banks. Before investing, compare the rates from different institutions to ensure you’re getting the best deal.
Ladder Your FDs
If you’re unsure about future liquidity needs, laddering your FDs can be a wise strategy. Instead of locking all your money in one FD, divide your investment into multiple FDs with varying maturities. This provides periodic liquidity and reduces reinvestment risk.
Read More: How Co-Branded Credit Cards can help you save more during festive season
Watch for Premature Withdrawal Penalties
While short-term FDs offer flexibility, withdrawing before maturity can lead to penalties, typically reducing your interest earnings. Make sure to understand these penalties before investing and try to avoid premature withdrawals unless absolutely necessary.
Check Tax Implications
Interest earned on FDs is taxable, and it falls under “Income from Other Sources” in your tax return. If your earnings exceed Rs 40,000 (Rs 50,000 for senior citizens) in a financial year, the bank will deduct TDS (Tax Deducted at Source).
The table below compares the interest rates on FDs up to 1 year. You can check and opt for the one that suits your financial needs.
For more news like this visit Officenewz.com
