Fixed deposits are the best type of investment because they guarantee fixed returns. Investors know the return they will receive from fixed deposits at maturity. Term deposit interest rates have been falling steadily. There are a few simple ways to increase your returns on fixed deposits.
How to get higher returns on fixed deposits
Search for the best rates: It’s always better to search for different fixed deposit options that are available. Each bank publishes its own interest rates, which can change at any time. You can compare fixed deposit rates offered by different banks to find the one that suits you best. Also, consider the bank’s credibility before choosing the bank. Private sector banks are safer and offer better returns.
Select the best period. The tenure of a FD is a major factor in determining an FD’s interest rate. Fixed deposits can be held for longer periods, such as 6, 12 or 24 months. Fixed deposits with a duration between 1 and 3 years will yield a higher return on investment. This gives you an even better understanding of the bank’s services.
No tax on fixed deposits: In the event that your income from interest rises Rs., TDS (tax deducted at source) is applied at 10%. 10,000. The Union Budget 2018 increased this limit to Rs. Senior citizens: 50,000 To ensure that the bank doesn’t deduct TDS from your interest, you must submit Forms 15G and 15H to the bank at each beginning of the fiscal year.
Apply for cumulative fixed deposit. The interest on term deposits is calculated at three intervals: quarterly, half-yearly and yearly. The cumulative fd does not allow you to access the interest earned at regular intervals. After the term deposit matures, it is paid together with the principal. Cumulative term deposits are best for people who have a fixed income, but not pensioners because they don’t have regular income.
Do not make premature withdrawals of your FD. In an emergency, you may be able to withdraw the money. This basically means that you withdraw the money before your deposit matures. You will be assessed a penalty for premature withdrawal from your bank in such instances. Banks usually charge a penalty of 0.5 to 1% for early withdrawals. Although the penalty is usually based on earned interest, it can vary from one bank to another.
These tips will help you get higher returns on your FD investments.