Want to earn good returns but are stressed about the risks of market-linked investments or the low yield from savings accounts? Fixed Deposits (FDs) are a smart alternative. They are known for their low risk and assured returns. Book your deposit online, choose a tenure, and enjoy predictable growth throughout the tenure.
However, interest rates are a crucial factor on which your FD success depends. Fixed deposit interest rates are important for millions of savers and investors in India. After all, this rate directly influences how much your FD will grow and what you will earn at maturity.
Learn more about the importance of FD interest rates, the factors that affect them, and tips to boost your returns.
Factors that affect fixed deposit interest rates
Inflation: When inflation is high, the Reserve Bank of India (RBI) raises interest rates to make lending expensive, curb borrowing and spending in the economy, and control prices. As lending rates increase, banks can also increase rates offered on fixed deposits, as they have a higher spread. Conversely, when inflation is low, banks may lower FD interest rates.
Reserve Bank of India policies: RBI’s policies, including repo rates, reverse repo rates, and cash reserve ratios, impact FD rates.
Economic stability: Interest rates often fall during economic downturns to encourage borrowing and spending. When the economy is doing well, interest rates on FDs may increase.
Tenure: Most banks offer higher interest rates on long-term FDs as they benefit from using your funds longer.
Tips to maximize your returns on fixed deposits
Here are a few tips and tricks you can use to get maximum returns from your fixed deposits:
Choose a bank that offers the highest returns
If you want to secure higher returns, choose IndusInd Bank Fixed Deposits. In addition to enjoying an industry-leading interest rate, you will also get the following benefits:
| Instant booking | Book your FD with a 100% digital and paperless process. |
| Multiple interest payout options | Choose how you want to receive your interest, i.e., monthly, quarterly, half-yearly, yearly, etc. |
| Loan facility | Secure a loan against your FD at nominal rates. Enjoy liquidity without breaking the deposit. |
| Auto-renewal | Hassle-free auto-renewal option to continue earning interest without interruption. |
| Tax-saver FD | Book FD for five years to reduce your tax liabilities. |
Open your IndusInd Bank Fixed Deposit online today for high growth and maximum convenience!
Opt for a cumulative FD.
Choosing cumulative FDs could be wise if your priority is maximizing growth through higher returns. In this FD, the interest you earn isn’t paid out at regular intervals. Instead, it is added back to your principal amount. This compounding effect allows the total investment to grow as the interest earns interest over time. At maturity, you will get a higher value than non-cumulative deposits.
Choose a longer tenure.
Bank FD interest rates generally increase with tenure. Hence, the longer your FD term, the higher your rates and growth via compounding. This approach is useful if you are not rushing to use your funds and want to grow your returns safely.
Ladder your deposits
If you don’t want to lock your funds long-term, implement an FD laddering strategy to balance good returns with liquidity.
Just divide one big FD into multiple FDs with different tenures (short, medium, and long term). For example, instead of one ₹10 lakh FD, create five ₹2 lakh FDs maturing in 1, 2, 3, 4, and 5 years, respectively. This method will give you annual liquidity, regular income, and the possible benefits of future rate adjustments.
Fill out form 15G/15H to get TDS (Tax Deducted at Source) relief
If your total income is below the taxable limit, submit Form 15G (or Form 15H for senior citizens) to your bank to prevent TDS on the interest. Since more of your interest stays in your account, you will have a higher amount at maturity.
To sum up
Understanding FD interest rates is necessary for smart investing, especially if you value capital protection and stable returns. Choose the right bank with high FD rates, assess the loan facility against deposits, use a laddering strategy to balance liquidity and returns, and check early withdrawal penalties. These steps can help you achieve the expected stability and meet your financial goals effectively. Remember, a wise investor is not just one who saves but smartly invests.
