If you wish to earn better returns, you may consider selecting these banks for your fixed deposit investments.
An investment that consistently draws the attention of investors is the fixed deposit offered by banks. The rationale behind this interest is straightforward: the security of the invested capital and the assurance of returns on the investment. Nevertheless, investors persist in seeking methods to enhance their earnings from these fixed schemes that provide guaranteed returns.
If you wish to earn better returns, you may consider selecting small finance banks (SFBs) for your fixed deposit investments. These institutions provide interest rates that are generally more favorable than those offered by traditional banks or financial entities. Investors have the opportunity to leverage these rates to enhance their savings. Below is a guide designed to assist you in maximizing your fixed deposit investments.
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Choose Banks and Terms Wisely
Not all SFBs offer the same rates. Some may offer up to 9% interest for specific tenures. It’s important to research and compare rates across banks. You should also check their financial stability and RBI guidelines.
Longer tenures typically provide higher rates, but this isn’t always the case. Many banks give the highest interest for medium-term deposits, such as 1-3 years. Carefully choose the tenure that matches your financial goals.
Spread Your Investments
Avoid locking all your funds in one FD. Spreading investments across multiple banks and tenures reduces risks and improves flexibility. It ensures you can access funds if needed without breaking all your FDs.
Laddering is a useful strategy. It involves investing in FDs with different maturity dates. This approach offers liquidity and ensures you earn competitive rates across varying terms. For instance, divide Rs 5 lakh into five FDs of Rs 1 lakh each, maturing in 1, 2, 3, 4, and 5 years. This way, one FD matures annually, allowing you to reinvest at prevailing higher rates.
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Invest In Special Schemes
Many SFBs offer limited-time schemes with better rates. These schemes often target specific periods like festivals or the financial year-end. Keep an eye out for these offers. Also, explore senior citizen-exclusive schemes if applicable. These schemes often provide an additional interest rate of 0.50%-0.75%.
Small finance banks can be a game-changer for FD investors. Their high rates and special schemes are unmatched by traditional banks. However, choosing wisely is key. Compare rates, spread your investments, and stay informed about special offers. Follow these steps to maximise your returns while maintaining financial safety. Always balance the allure of high interest with the bank’s reputation and RBI regulations.
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| Bank | Interest Rates (1 to 2 years) |
| AU Small Finance Bank | 8 |
| Equitas Small Finance Bank | 8.25 |
| ESAF Small Finance Bank | 8.25 |
| Jana Small Finance Bank | 8.25 |
| Suryoday Small Finance Bank | 8.5 |
| Utkarsh Small Finance Bank | 8.5 |
| Ujjivan Small Finance Bank | 8.25 |
Compiled by BankBazaar.com
Data as on respective banks’ website on 15 Nov 2024; The maximum offered interest rate is considered; interest rate is for a normal fixed deposit amount below ₹1 crore.
