Saving is an integral part of our lives, as it makes us future-ready. Supposedly, you are working for years and have saved a substantial amount in your bank account. But, do you know that money lying in the bank account can give you a higher return? A fixed deposit is a low-risk option to get better returns. Though there are other ways of making more money such as investing in the stock market or mutual funds, a fixed deposit is a secured deposit, thus your money is parked safely in the bank. A fixed deposit has a higher interest rate than that of a savings account, but do you know that you can earn even more interest on FD? Let’s look at the ways to earn higher interest on fixed deposits.
Research about Interest Rate
Identify the bank that is giving the best return on a fixed deposit. Although interest rate is a primary factor, it should not be the only criterion. Also research on financial performance, history and other information about the bank. If you have shortlisted two banks with a minor difference in the interest rate, look at the other factors before deciding. You can also split the investment between the two banks.
Choose Longer Tenure
Banks usually pay a higher interest on a long tenure fixed deposit. The reason being that they get to use the money for a longer time. In case you don’t have any liquidity required in the near future, choose a longer tenure.
Invest in a Corporate Fixed Deposit
The last couple of months have been financially unpredictable for banks. Most of them have accumulated more deposits than what they are lending. As a result, some banks have reduced the interest rate on fixed deposits. You can check out corporate FD as it might offer a higher interest rate. This could be a great way to maximise your return on a fixed deposit.
Choose Cumulative Interest Payment Frequency
When you open a fixed deposit, you have the option to choose between a cumulative and non-cumulative fixed deposit. In a cumulative fixed deposit, you get the entire interest on maturity. The interest is added to the principal amount usually quarterly, as a result you earn interest on interest. The compounding effect increases your maturity amount.
Submit Form 15G/15H
In case the interest earned on the fixed deposit is more than the specified limit, TDS will be deducted. You can submit Form 15G/15H to avoid any kind of deduction on the TDS on your corporate fixed amount.
A fixed deposit is a wise investment option. To open a fixed deposit, you can compare the interest rates and FD schemes offered by different banks and come to a decision. Also, you can check out the IndusInd Bank fixed deposit plan and open an account immediately without the need of going to a bank branch.