Sat. Sep 23rd, 2023
Know all about Interest Rate On Fixed Deposits, Latest News Adda

During this period of economic turbulence, many investors have preferred to invest in fixed income instruments like FDs and fixed assets like land and property. Investing in fixed deposits can prove to be a smart decision as it keeps your money secure while growing it at a decent rate. However, the returns that you will be earning at maturity depending on the interest rate and tenor that you pick for your deposits. The bank FD rates do not match up to your expectations currently whereas market-linked instruments cannot ensure the stability that you need. 

To counter these issues, you can invest in a corporate FD that provides a steady growth rate for your investment. The key factors that make a corporate or company FD lucrative in today’s times are given below: 

High FD rates 

The fixed deposit rates in India have been reduced due to the economic policies and repo rate cuts enforced by RBI. Also, company FDs are offering much higher interest rates than bank or post office term deposits. A higher fixed deposit rate means that your deposits will fetch much more returns upon tenor completion. 

If you invest Rs. 30,00,000 in a bank FD for 5 years, the maximum interest rate that you can get is 6.5%. The postal FDs will offer a 6.7% interest rate for a 5-year deposit. On the other hand, a company FD can provide much higher FD rates. For example, Bajaj Finance FD grows your deposits at interest rates that go up to 6.75%. The below table shows the difference in returns that this higher interest rate can provide:

Fixed Deposit Plan Principal amount  Tenor  Rate of Interest  Interest gains Maturity value  Growth in investment (%)
Bank FD Rs. 30,00,000 5 years 6.5% Rs. 11,41,259 Rs. 41,41,259 38.04%
Post Office FD Rs. 30,00,000 5 years 6.7% Rs. 11,82,201 Rs. 41,82,201 39.40%
Bajaj Finance FD Rs. 30,00,000 5 years 6.75% Rs. 12,57.040 Rs. 42,57,040 41.90%
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Extra interest rate to online investors 

If you invest in a corporate FD by using an online FD form, you might get an extra FD interest rate. For instance, Bajaj Finance FD offers a 0.10% additional rate to online investors. 

Similarly, senior citizens get a 0.25% higher FD rate on choosing any of the investment methods. These excess FD rates will help you to collect higher returns at maturity. Also, you can choose a periodic interest payout as well from the monthly, quarterly, yearly, or bi-annual interest payout options by investing in its non-cumulative FDs. The periodic interest can be used to manage your short-term fund requirements or to clear monthly bills and other expenses. Suppose that you invest Rs. 30,00,000 in a non-cumulative FD from Bajaj Finance for 5 years. The periodic interest payout options that you will be eligible for are given in the below table:

Interest payout options  Interest rate Interest payout amount
Monthly 7.02% Rs. 17,550
Quarterly 7.06% Rs. 52,950
Bi-annual 7.12% Rs. 1,06,800
Annual  6.25% Rs. 2,17,500

Thus you can see that the interest earnings are good enough to manage your regular fund requirements and other expenses. 

Check the credibility of financier 

Despite the high-interest rates offered by corporate FDs, you must always check their credit ratings before investing. The credit ratings confirm how reliable and trustworthy a financier is. 

For example, Bajaj Finance FD has received the highest credit ratings from credit rating agencies like CRISIL and ICRA. This means that your money will be safe in this online FD scheme.

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It is wise to invest in fixed deposit plans as they keep your money secure despite the turbulences and uncertainties that prevail in the market. However, the bank FD rates are not sufficiently high currently, and to earn more returns you can invest in a company FD. For example, Bajaj Finance FD offers interest rates of up to 6.75% and ensures that you earn more than bank or postal FDs. The higher FD rates offered to senior citizens and online investors, periodic interest payout options, and high credit ratings from CRISIL and ICRA make it one of the best company FDs out there.

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