Fixed Deposit (FD) is one of the most popular methods of investment. Especially for people who do not take risks, fixed deposits can prove to be a better option. If you also want to invest in FD, then before investing you should see which bank is giving more interest on FD.
While making an FD, it is important to think carefully before deciding its tenure. This is because if investors withdraw the amount before maturity, they will have to pay a penalty. If the FD is broken before it matures, a penalty of up to 1% will have to be paid. This may reduce the total interest earned on the deposit. That is why one should avoid making long term FD due to the lure of higher interest.
If you are planning to invest Rs 10 lakh in an FD in one bank, instead invest in 9 FDs of Rs 1 lakh each and 2 FDs of Rs 50,000 each in more than one bank. With this, if you need money in between, you can arrange for the money by breaking the FD midway as per your need. The rest of your FD will remain safe.
Earlier there was an option to withdraw interest on quarterly and yearly basis in banks, now in some banks monthly withdrawal can also be done. You can choose it as per your need.
You can also take a loan against your FD. Under this, you can take loan up to 90% of the value of FD. Suppose the value of your FD is Rs 1.5 lakh, then you can get a loan of Rs 1 lakh 35 thousand. If you take a loan against FD, you will have to pay 1-2% more interest than the interest you get on fixed deposits. For example, suppose you are getting 6% interest on your FD, then you can get a loan at 7 to 8% interest rate.
Most banks offer up to 0.50% higher interest on FD to senior citizens. In such a situation, if there is a senior citizen in your house, then you can earn more profit by getting an FD made in his name.
