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Thursday, May 26, 2022

How To Select The Best Fixed Deposit Scheme

Everyone wishes to be financially independent and efficient. To experience sound financial health, proper planning is necessary. Investing in a fixed deposit can help you accomplish goals that require a significant amount and will make you financially stable at the same time.

Fixed deposits can be termed as financial arrangements that allow individuals to deposit a certain amount in the bank or any financial institution for a fixed tenure and earn interest at a steady rate. It is a great way to save money and use it for short-term goals like constructing homes, buying automobiles or savings for marriage and other activities. To park your savings in a fixed deposit go through the article and select the best scheme that suits your goals.

Select Financial Institutes Offering Considerable Interest-Rate

Opt for banks and other financial institutes, which offer more than a 5% Fd interest rate for a period of two to three years. Finalizing fixed deposit schemes lower than 5% interest rate will defeat the whole purpose of investing in FD. So, while looking to park your money in a fixed deposit, choose companies or banks that offer more than a 5% interest rate. Banks like SBI offer an interest rate of 5.10%. Other Non-banking institutions promise interests up to 7.5%. But investing in non-banking institutions can be an individual choice.

Finalize Stable And Reliable Lenders

It is mandatory to conduct detailed research concerning the reliability of a lender before opening a Fixed deposit account under their brand name. You should consider the ratings and background history of the lender and check their credibility for safe transactions. To avoid loss and betrayals, learn about their offers and schemes beforehand. If the offers fail to seem trustworthy, then try not to proceed further. Examine the safety rating of the fixed deposits through ICRA and CRISILs ratings. These are agencies that rate the safety credibility of fixed deposits. Look out for ICRA’s MAAA and CRISIL’S FAAA ratings for safe and secure transactions.

Select Institutes That Offer Hassle-Free Application Procedure

Financial institutes do abide by their own set of application systems. Some follow online procedures and others require you to visit their branch or the main office to get started with the application process. Select institutes that are easily accessible and offer reliable customer services for effective future transactions.

Choose Between Cumulative And Non-Cumulative Fds

Non-cumulative fixed deposits offer monthly, quarterly, semi quarterly or yearly earnings. But cumulative fixed deposits, on the other hand, provide earnings upon maturity. Cumulative fixed deposits are advantageous as they provide higher earnings. If your goal is to get the maximum amount upon maturity, then opt for cumulative FDs than non-cumulative ones that offer regular payouts.

Inquire About The Penalty Charges

There are various ways and instances in which one may be compelled to use fixed deposits before maturity. Uncertain situations may arrive anytime and would require you to withdraw your FD before the actual maturity date arrives. Inquire about the penalty withdrawal rate charged by various banking and non-banking institutions and compare them for a clearer picture. If the penalty amount charged is hefty, make sure to continue the fixed deposit until its maturity due date. Also, the rate of the penalty varies from lender to lender, make sure to conduct thorough research before finalizing one.

If You Are Investing In A Bank FD, Follow These Tips:-

  • A bank FD provides a high-interest rate, typically more than a normal savings account.
  • Investing in a bank FD ensures safe and guaranteed returns.
  • Stick to public sector banks against their private counterparts for safer returns.
  • Know the tenure, interest after-tax, Fd inflation, etc of the bank before investing your money.
  • Note the penalty rates charged by different banks upon performing premature withdrawals.
  • Compare the FD schemes of different banks and choose the one with the best offers.
  • Acknowledge yourself with the auto-renewal, premature withdrawal, auto-withdrawal, and tax on interests earned in a fixed deposit.

Before putting your money into a bank, know these things to gain a better understanding of the services that it provides.

These were some of the crucial points to consider while choosing the best-fixed deposit scheme. Your aims and plans must match with your investment goals to maintain an effective savings strategy. Fixed deposits not only help you save your hard-earned money but also earns a steady interest, helping you accumulate a considerable amount, higher than your principal amount. Choosing the perfect FD scheme can help you make your plans financially sound and secure.

Also Read: MSUMD2L

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