Know Everything About Term Deposit Interest Rates in India

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Term Deposit is a type of investment avenue in which a lump sum amount of money is kept in a store for a fixed period of time. Banks, NBFCs (Non-banking Financial Companies) like Bajaj Finance and even post offices provide the facility of Term Deposits in India. They can be broadly classified into 2 schemes i.e.

  1. Fixed Deposits: FD and
  2. Recurring Deposits: RD

The major difference between RD and FD is that in the case of Fixed Deposits, your investment remains locked for a specified period. While in case of Recurring Deposits you have to deposit a fixed amount each month for a specific time.

A term deposit is one of the safest methods to earn a good amount on your savings with no downside risks. However, here are a few things to know about term deposit interest rates before investing your hard-earned money:

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  • FD rates/Term deposit interest rates tend to fluctuate
    Term deposit interest rates change with the changing circumstances and the following factors play a crucial role in the same:

    i) Inflation: Increase in inflation rate is directly proportional to FD rates. That means if inflation increases, the term deposit interest rates also increase.

    ii) Demand and supply conditions: Less demand for credit causes no decrease in fixed deposit rates whereas a high demand for credit forces banks to increase FD rates.

    iii) Falling call rates: If the call rates are falling and there is less liquidity in the market, it also causes fluctuation in the term deposit interest rates.

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  • Tax saver FDs offer different range of Interest along with Tax Benefits
    Tax saving FD is another type of Term Deposit where customers have the option to cut down their taxable income. Investors can put in up to Rs 1.5 lakh of the amount in a tax-saving fixed deposit which can be stated in deductions u/s 80C of the Income Tax Act, 1961. The interest rate on tax saver FDs ranges from 5.5% to 7.75%. However, the total interest income becomes taxable in case it exceeds Rs. 10,000 a year. A 10% TDS is charged on this.

 

 

  • Cumulative and non-cumulative payout options
    Cumulative fixed deposit compound interest every quarter or year but the total amount is paid at the time of maturity whereas, in a non-cumulative FD, interest is paid out monthly, quarterly, half-yearly or annually, as per the investor’s choice. These both offer different interest rates on investment.

    A non-cumulative interest payout option is better for the one looking for a regular source of income whereas cumulative is for the one who wants higher returns. When selecting the right term deposit it is important to analyse your need first and then choose accordingly.

 

 

  • Term deposit interest rates vary according to tenure and the type of customer
    Interest rates provided by Banks and NBFCs vary on the basis of tenure. The higher the tenure, higher will be the term deposit interest rate. So, you should be going for a higher tenure term deposit.

    Moreover, a person above 60 years of age i.e senior citizen gets a higher rate of interest on their term deposits. For instance, Bajaj Finance Fixed Deposits offer an additional 0.25% rate of interest to senior citizens.
  • Best term deposit interest rates in India 2020

 

Name Tenure of 1 year Tenure of 3 years Tenure of 5 years
Bajaj Finance  7.40% 7.50% 7.60%
SBI 5.25% 6.00% 6.25%
ICICI 4.00% 6.5% 6.5%
Citi Bank 3% 5% 5%
Axis Bank 3.5% 6.7% 6.7%
HDFC Bank 3.5% 6% 6%
Canara Bank 4.20% 6.20% 6%
HDFC Bank 3.5% 6% 6%
IDFC First Bank 4% 4.5% 4.6%

 

With CRISIL’s FAAA/Stable rating and ICRA’s MAAA (stable) rating, your investments in Bajaj Finance FDs are never at risk. Apart from the highest FD interest rates in India as shown in the table, Bajaj Finance FDs offer you numerous benefits such as online application of FDs, the facility of loan against fixed deposits, premature withdrawal etc.

Still, all the information provided above may create chaos in the minds of the readers and so to simplify the process and make you invest more conveniently in Term Deposits we have fixed deposit interest calculator. Now you can determine the exact value of your investments even before you start investing.

What is Bajaj Finance Fixed Deposit Interest Calculator?

It is an online tool designed to help you estimate your FD maturity amount along with the earned interest. It helps you choose the best term deposit plan with best interest rates and features, thus managing your future finances well.Also Read: Bone Broth Recipe

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