How to Choose Some of the Best Fixed Deposits (FDs)

Fixed Deposits (FDs) are one of the most popular and sought-after investment options. Along with the competitive interest rates and flexible tenures, the secure and safe nature of the investment makes them all the more attractive.

While most banks and Non-Banking Financial Corporations (NBFCs) offer FDs, it's important to choose the one that best suits your needs.

Factors to Consider Before Choosing Some of the Best Fixed Deposit Schemes

FDs ensure capital safety during market volatility, offering steady growth and security. Compare interest rates, tenure flexibility, and benefits across banks/NBFCs to choose some of the best deposit schemes. Here are some key factors to consider:

• Interest Rate

The interest rate on your savings is a key factor influencing FD returns. It's important to compare rates across different banks to find the best options, ensuring you understand all terms and conditions. While higher rates generally lead to better returns, always verify any additional terms that may affect your investment, such as early withdrawal penalties or deposit conditions.

• Credibility

Before investing, assess the financial institution's credibility. For best FD plans, choose well-established banks with strong credit ratings from trusted agencies to ensure stability, safeguard your principal, and reduce default risks.

• Deposit Tenure

Fixed deposits offer tenures ranging from days to years. Align your deposit with your financial goals and liquidity needs. Short-term FDs provide flexibility, while long-term options offer higher rates.

• Interest Calculation and Payouts

For regular income options, you can choose periodic payouts and select the compounding frequency. More frequent compounding generally results in higher returns.

• Reinvestment

Reinvest the interest earned to grow your FD corpus. Consider opting for auto-renewal options to ensure seamless reinvestment.

• Application Process

The fixed deposit application process will vary from one institution to another. So, when you’re choosing the best FD for yourself, it is crucial to ensure that the application process is easy and hassle-free.

Banks and NBFCs have now begun to offer a paperless FD account opening process that allows you to quickly open a fixed deposit at your convenience. 

• Type of FD 

There are two different types of FDs that you can opt for - cumulative FD and non-cumulative FD. In a cumulative FD, the interest gets accumulated and is paid out to you on maturity along with the principal. 

In the case of a non-cumulative FD, the interest is paid out periodically as per the chosen frequency. For instance, you can choose to get the interest payout on a non-cumulative FD on a monthly, quarterly, half-yearly, or annual basis. 

• Ability to Get a Loan

Many institutions provide you with the facility of getting a loan against your FD. You can opt for this feature during a financial emergency and avail a quick loan by using your deposit as a collateral.

Depending on the institution, you may get up to a maximum of 90% of your deposit. The tenure of such loans is usually restricted to your FD’s tenure. Therefore, when determining the best fixed deposit scheme, it is advisable to ensure that it comes with this feature. 

• Premature Withdrawal

Although many of the best FD schemes offer premature withdrawal of your investment, there are quite a few that have restrictions. Remember to opt for a plan that comes with the premature withdrawal facility since it can be very helpful during emergencies. 

That said, also keep in mind that there’s a penalty for early withdrawals and that this penalty may vary depending on the institution that you opt for.

• Credibility of the Institution 

Another major factor that you would have to consider when choosing the best FD for yourself is the credibility of the institution and the plan itself. 

In the case of NBFCs, both the institution and the FD are assessed and offered credit ratings by credit rating agencies like CRISIL and ICRA, among others. The higher the credit ratings, the more credible and safer the investment plan is. This will help you choose the best fixed deposit plan.

For banks, however, there usually aren’t any credit ratings to go by. But you get insurance coverage on your FD to the tune of ₹5 Lakhs from Deposit Insurance and Credit Guarantee Corporation (DICGC). 

Some of the Best FD Schemes in India

Here is a table of some of the best fixed deposit schemes in India you can consider: 

Disclaimer: The banks with ‘*’ are partners of Bajaj Markets. The interest rates added above may change subject to the bank’s policies. 

Some of the Best NBFC Fixed Deposit Schemes in India

Just like banks, NBFCs also offer FDs with a tenure of 5 years with highly attractive interest rates. Check out some of the best NBFC FDs and associated rates of interest down below. 

Disclaimer: The interest rates mentioned above are subject to the policies of the NBFC. 

Conclusion

As you’re now aware of how to choose some of the best FDs for yourself, go ahead and invest in one today. That said, don’t forget to compare multiple FDs with one another. Bajaj Markets makes this process simpler and allows you to apply for the best-suited fixed deposit.