A fixed deposit is an investment of your savings to earn a higher rate of return than a regular savings account. It is offered by banks and NBFCs (Non Banking Financial Companies). A fixed deposit has the lowest risk in the portfolio of investment. Money is invested in a fixed deposit with a lock in period and interest is given either at the end of the maturity date or as a regular payout.
Parking your investment in the correct Fixed Deposit in 2021 will ensure high fd returns on maturity and also a choice of regular interest payouts throughout the chosen tenure. To ensure high returns you must look for a FD scheme with a high interest rate payouts
Fixed Deposit schemes offered by the corporates pay interest on cumulative as well as non-cumulative basis, depending on the choice that the applicant makes. Someone who wants to invest for a long period of time and grow money by compounding chooses cumulative schemes. In this case both the principal and accumulated interest is paid on maturity. A customer who is looking to earn a regular income on a yearly, half yearly, quarterly or monthly basis by investing in Fixed Deposit, chooses non-cumulative schemes. The rates of interest are subject to change on the sole discretion of the company.
There are many factors which contribute to the calculation of fixed deposit interest rates. Some of them are noted below:
- Deposit Tenure: A lower tenure will yield a lower interest rate. For a higher interest rate, the tenure should be high or medium range
- Deposit Amount: Higher deposit amounts will fetch you higher interest rates, especially bulk deposits exceeding Rs.1 crore. Deposit amounts are also directly proportional to interest rates. A higher deposit amount will fetch you a handsome interest rate, specially bulk deposits exceeding 1 cr.
- Depositor type: Senior citizens typically get 0.25% to 0.50% additional interest rate on fixed deposits.
To ensure high returns you must look for a FD scheme with a high interest rate payouts
You can calculate Fixed Deposit interest rates on Fixed Deposit interest rates calculators
For a lucrative return of Fixed Deposit Investment, banks with higher interest rates are a must. Bajaj Finance offers a money making return with an interest within the range of 5.65% to 6.50%. In 2021. Other banks including Bank of Baroda offers an interest rate of 2.80% to 5.25%, Citibank offers an interest rate of 2.40% to 3.50%, Kotak Bank offers an interest rate of 2.5% to 5.3%, IDFC Bank offers an interest rate of 2.75% to 6% and Indian Bank offers an interest rate of 2.90% to 5.25%.
For long tenures, Bajaj Finance stands out with a 6.75% interest rate while IDFC Bank offers 6.5% interest rate in the long run. While Kotak Bank offers an interest rate of 5.80% in the long run, Bank of Baroda and Indian Bank both offer an interest rate of 5.75% in the long run. Citibank in the long run offers an interest rate of 4.00%.
Your interest income and yield of your Fixed Deposit is influenced by the effective interest rate on your deposit. The following formula is used to calculate the effective annual interest rate.
Effective Rate = (1 + Nominal Rate / n) n-1
N is the number of periods per year
Let’s say for example, the annual interest rate is 10%. When the interest rate is compounded annually, it will turn out to be 10%. But if it is compounded quarterly, the effective interest rate would be 14.48%
So the next time you invest in a Fixed Deposit, keep in mind the FD interest rate of different banks as well as how FD rates are effectively calculated.
Bajaj Finance is considered to be one of the safest investment options. It helps to grow your savings easily. When you make a smart investment in Bajaj Finance Fixed Deposit, you watch your savings grow.