How to Choose the Best FD Scheme with Maximum Interest?

Are you looking to maximise the Fixed Deposit interest rate the bank offers? Have you ever wondered why some FDs offer a higher interest than others or how to identify which FD scheme will give you the highest return? Choosing a suitable FD scheme can be daunting, but with all the available options, you need not worry.

Before comparing the highest interest rate on FD, it is important to consider some aspects impacting them. Banks offer online account management platforms, but you need to assess which scheme suits your financial status and goals. Consider this guide:

Interest rate

One of the important factors to consider when choosing an FD scheme is the bank’s interest rate. It is a percentage that the bank pays you for holding funds. The interest rates vary depending on the scheme. Typically, longer FD tenures involve higher interest rates. Determine the investment tenure according to your goals and compare the interest rates between banks to select the ideal scheme.

Tenure

The deposit tenure refers to the time for which you hold the FD. It ranges from a few months to several years. A longer tenure generally translates to higher FD rates, but it also means your money gets locked in for longer. Choosing a tenure that aligns with your financial goals and needs is paramount.

Bank credibility and reputation

When choosing the best FD scheme with the maximum interest rate, one of the most important factors is the bank’s credibility and reputation. It is vital to choose a bank with a good track record of stability and reliability that is well-known and respected in the industry.

Taxation

The interest earned on FDs is taxable, and the rate of taxation depends on the investor’s tax slab. Banks deduct TDS on interest earned on FDs, but the investor must pay additional taxes if the total interest income exceeds a certain threshold. You can also invest in Tax-Saving Deposits on the Banking app and get deductions under Section 80 C of the Income Tax Act.

Premature withdrawals and penalties

Premature withdrawal is when you withdraw your money before the FD’s maturity date. In such cases, banks usually charge a penalty, ranging from a percentage of the interest earned to a percentage of the principal amount.

However, if you require money urgently, you can consider applying for a Loan against the Fixed Deposit, wherein you do not withdraw the entire amount but pledge it as collateral against the Loan to the bank.

Points to note

To get the FD interest rates for 2023, you must refer to several bank apps and websites, compare them, research their features, benefits, and interest rates, and read their terms and conditions carefully before investing.

Final words

Banks also offer other attractive benefits. Choose the scheme wisely and experience short-term or long-term wealth enhancement and ease of access anytime. Start investing today!