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7 Things You Should Consider Before You Fix Your Interest Rate

Things You Should Consider Before You Fix Your Interest Rate

High-interest rates and stability of the deposited amount attract investors towards fixed deposit plans. Though a fixed deposit is a safer option than market-linked instruments, you should not hurry in while investing as it might affect the chances of maximizing your earning potential.

Here are a few things that you must consider before finalizing an FD plan:

Analyze your investment needs

Before opening an FD account it is better to set your financial goals straight or else you will not be able to optimize your savings properly. Also, it is better to be prepared for the future expenses and your fixed deposits must not come in its way. 

For example, if you are planning to buy a car after 5 years then you can select an amount and tenor accordingly. 

In such cases, you can go for cumulative FDs of longer tenors that also provide a high FD rate. Bajaj Finance FD enables you to lock-in cumulative FDs up to 5 years and the interest rate of 7.35% is one of the highest FD interest rates in India

Liquidity needs

Apart from that, you must also manage your investments in such a way that you don’t falter when there are any financial emergencies. For that, you must check the liquidity offered by various banks and NBFCs before investing your money. 

For instance, you can invest in an FD plan that enables you to use it as collateral for availing a loan in case of an emergency.

Flexibility & Interest Payouts 

Also, it is better to explore the financiers that offer flexibility in terms of tenor and interest payouts. Fixed deposit plans that offer monthly interest payouts can prove to be crucial for those who do not have a stable source of income. 

Bajaj Finance enables you to select a tenor from 12 to 60 months and the option of choosing monthly, quarterly, six-monthly, and yearly interest payouts is also available. 

Consider inflation 

The inflation increases with time and reduces the value created by your FD at maturity.  Therefore, you must choose an FD rate that is good enough to beat the inflation rate while maintaining the stability of your investment amount. 

Having an idea about the current inflation rate will also allow you to pick a deposit amount and tenor that will provide sufficient returns to keep the purchasing power of your investments intact.

Tracking investments 

It is also important to track your investments after booking an FD. Therefore, while choosing an FD plan also check the tracking options that you get.  For example, Bajaj Finance offers a customer portal called Experia through which you can monitor your investments conveniently. 

Compare FD plans

Compare fixed deposit plans of various banks and finance companies to pick the right FD plan as per your requirements.

An FD calculator is an online tool that assists you in finding the best FD rates in 2020, This calculator will also help you to calculate the exact returns that you would receive post maturity. 

Invest in multiple FDs 

Since the interest rates of bank fixed deposits are on the lower side, it is better to invest in multiple FDs of varying tenors to balance the difference of FD interest rates. 

By laddering your deposits, you will not only benefit from short term gains but you can also work towards your long term financial goals. 

The multi-deposit facility provided by Bajaj Finance helps you to open multiple FD accounts of varying tenors and types with a single cheque. Also, you will be applicable for a 0.10% additional FD rate on filling an online FD form to book an FD. Also, these FDs are safe as they have received high ratings from reputed credit rating organizations like ICRA and CRISIL.

Fixed deposits offer lucrative returns but you should be careful before investing in an FD as there are various factors associated with it. Some of these factors are tenor, liquidity, interest payouts, FD type, interest rates, the stability of invested amount, etc. If you want to know how to calculate FD interest, you can use an FD calculator. Bajaj Finance FDs prove to be one of the better options as they not only provide a high-interest rate of 7.35% but also provide flexibility tenor, multi-deposit facility, online investment option, and several other features.

About the Guest Author

guest author

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory.

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