How Beneficial Are Revised Fixed Deposit Rates?

Fixed deposits are one of the safest forms of investment. There are various reasons why an individual decides to opt for fixed deposits, but the primary reason is to safeguard the investment and earn considerable interest over a period of time. In the past few years, fixed deposit rates have come down as the government is more focused towards providing affordable home loans. Recently, many investors have turned reluctant when it comes to investing in a fixed deposit.

It is important to know that even in such a scenario, there are several Non-Banking Financial Companies (NBFCs) which are providing better interest rates than other lenders. Fixed deposit interest rates are slightly moving towards the positive side with the recent introductions. Few financial institutions have started to come out and help investors achieve a higher rate of interest.

This has led to an increased trust among the investors when it comes to FDs. Much to their contentment, people looking forward to investing in a FD can now go ahead with the same as the interest rates have been revised. The majority of banks and Non-Banking Financial Companies (NBFCs) have revised their rate of interest.

Various lenders have cut the interest rates in a short-term FD, whereas, for a longer tenure the interest rates have been increased. Several lenders brought FD interest rates down by 25-50 basis points for a small tenure FD, where the interest rate has been brought down to 6.9% from 7% for a one-year tenure. 



On the contrary, when we talk about fixed deposits for a period ranging from 3-5 years, the fixed deposit interest rates have increased from 6.5%-6.75%. Several lenders increased the interest rates by 25 basis points. For example, for a fixed deposit, for a period more than a year, the interest rates have witnessed an increase.

How has a revision in a fixed-deposit occurred?

High liquidity: Due to a high liquidity being experienced in the short-term buckets, interest rates have been raised for a long-term investment. Many financial experts believe that the interest rates will remain soft until the liquidity goes away, and as of now, liquidity remains sticky.

How does it benefit you?

The rate of interest has experienced a change in recent years. All the major financial institutions have brought about a considerable change in the rate of interest. The tilt has turned in favour of the investors. But, it is essential that you check the rate of interest in detail before you invest for a particular tenure.

How can you make the most out of it?

Consider the maturity baskets. Now since the change has been introduced after so long, investors have started to see a ray of hope in this segment. Thus, lay emphasis on the maturity baskets and make the most out of it by selecting the best rate of interest options.

Apart from already established financial institutions, you can look forward to the most buzzing ones in the market as they are the first ones to offer you a better rate of interest. Mostly, the NBFCs, just keep an eye on them. Apart from long-term investments, you can also choose to invest in ultra-short term funds. At the end of it all, it is the interest rate that matters, therefore, various online tools help you to evaluate the returns before you even approach any financial institution.