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To earn the maximum returns on your investment, you need to find the most acceptable Fixed Deposit (FD) scheme. Before applying for a term deposit, you must evaluate several things to select the best FD scheme. It’s a good idea to think about the fixed deposit interest rates paid, the Bank or financial organisation supplying the FD’s credibility, overall yield, interest compounding frequency, and so on.
Banks and non-banking financial companies both provide FDs in India (NBFCs). Compared to banks or NBFCs, corporate business FDs typically pay higher fixed deposit interest rates on time deposits.
It would help if you did some homework before investing your hard-earned money into a fixed deposit scheme.
How to Select the Most Appropriate Fixed Deposit
Before applying for an FD, consider the following factors:
- Interest: The fixed deposit interest rates are the most significant elements to consider when choosing an FD programme. Before investing in an FD programme, you should check the rates of interest given by numerous banks.
- Loan: Depending on the lender, you may be able to get a loan against the amount in your FD account. If you want finances, you may want to consider opening an FD account with such a bank.
- The credibility of the Bank: Before you invest in an FD plan, you should think about the Bank’s credibility. You should look for ‘A-rated schemes and evaluate ratings from ICRA and CRISIL.
- Premature Withdrawal: When investing in an FD scheme, choosing a bank that allows for early withdrawal is critical. In an emergency, the premature withdrawal function will allow you to withdraw funds. Premature withdrawal, on the other hand, may result in a penalty.
- If you choose a cumulative deposit, the interest is paid when the FD matures. If you select a non-cumulative deposit, the interest is paid when the FD matures. An annual, half-yearly, quarterly, or monthly interest payment is made on a non-cumulative deposit.
- Bank or Non-Banking Financial Company (NBFC): NBFCs often issue FDs with a one-year minimum term. On the other hand, most banks provide FDs with a minimum period of seven days.
- Rates of Penalty: Before investing in an FD programme, make sure you understand the fees charged if you withdraw your money early.
How Do You Pick a Good Fixed Deposit Plan?
- Unlike corporate fixed deposit schemes, Bank fixed deposit plans are not based on credit ratings.
- Experts recommend sticking to PSU banks or a few private sector banks for a safe return.
- Investors should consider several factors, including the maturity amount, interest, after-tax interest, and inflation-adjusted returns, among others.
- In addition to the deposit time, you must decide on the amount invested in a fixed deposit.
- Different banks have different fd interest rates and loan terms. Before placing money in a fixed deposit, investors should conduct a comparative analysis.
- Premature withdrawal clauses differ from Bank to Bank, so you’ll need to research them.
- Various banks provide a variety of fixed deposit options.
Top Rated Company Deposit Schemes in India
| Company | Rating |
| Bajaj Finance Limited | FAAA (Stable) by CRISIL and MAAA by ICRA |
| LIC Housing Finance Limited | CRISIL – FAAA (Stable) |
| HDFC Limited | FAAA By ICRA and CRISIL |
| Mahindra & Mahindra Finance Serv Ltd | CRISIL – FAAA |
How to Choose the Best Fixed Deposit: Frequently Asked Questions
I want to create an account with a specific bank for a fixed deposit (FD). Is it necessary for me to have a savings account with the lender?
To open an FD account with the lender, you must first open a bank account with them.
If I open an FD account, will I be able to nominate someone?
Most Indian banks provide nomination services when you open an FD account.
Is it possible for NRIs to open FD accounts in India?
Yes, an NRI can open a savings account in India in their name. Depending on their currency to deposit the money in, they can open an NRE or an NRO account.
Is it possible to get a loan against a fixed deposit if the account is in the name of a minor?
If the account is in the name of a minor, you will not be able to take out a loan against the fixed deposit. When the kid reaches the age of 18, they are eligible to use the service.
Is TDS (Tax Deducted at Source) applicable when opening a fixed-income account?
Interest earned up to Rs. 10,000 is not taxable. If your total income is less than the taxable limit, submit Form 15G or 15H when opening an FD account.
