FD investors keep witnessing the rise and fall in the FD interest rates. While there was a significantly high-interest rate of 9% offered by the SBI in 2014, recently, it dropped to 5.4% in 2020.
While low FD interest rates cause worry and financial stress for people, a higher interest rate on FD means a better income for many people. It is a matter of concern for senior citizens as they rely on FD interest for their regular income. Now, it has been seen that the banks and other financial institutions have begun to offer an increase in the FD interest rates, marginally though.
Rising Interest Rate
You can earn money from interest on the FD. When the interest rate rises, it means that you can earn more. When the FD has raised interest rates in the past, it was observed by the financial services agencies as well as the banks and brokerages that there was a significant improvement in the interest income leading to better profit margins.
Rising interest rates help the investors to have more money in their pockets. This means that they often make more purchases and earn more deposits in their account during this time. The banks make money by increasing the interest rate by earning in larger volumes.
Advantages of Rising Interest Rate
With the rise in FD rate, the investor’s earnings also increase. You must take advantage of this rising FD rate to generate more earnings at the maturity of the FD. This is the reason many investors invest in a bank or NBFC that offers the best return on investment on FD compared to the others.
To take the advantage of increasing interest rates:
- You must start investing more in the FD.
- Since FD is a secure mode of investment, you can freely park your money in FD rather than keeping the same in the low-interest savings bank account.
- Ensure to invest in a longer tenure, as the banks and NBFC offer a better interest rate on the 3 to 5 years tenure compared to the 1 to 2 years tenure.
- Prefer choosing a bank or NBFC that offers the highest interest rate. Always take a look at the FD interest rates comparison to make your decision.
Here are the FD rates offered by different banks*:
FD interest rates comparison by the NBFCs are mentioned in the below table:
*Interest rates mentioned in the above table can vary from one lending partner to the other and are subject to change
So, as you can see NBFCs such as Bajaj Finance offer the best FD interest rates, and hence, most investors prefer investing with Bajaj Finance.
Fixed deposits have been the best investment product to date. Fixed deposits have largely evolved over the years and have become a highly versatile and flexible financial tool to increase your income too. Since it offers guaranteed returns and a high rate of interest, you don’t have to bother about the rise and fall of the market.