Fixed deposits give you returns with zero risks. Many financial institutions offer a fixed interest rate on your fixed deposits. You can choose how long you want your money to remain fixed. The longer your money remains fixed, the more income you earn as interest.
But you shouldn’t just settle for any bank when looking for a fixed deposit scheme. You need to research well and choose one that offers the best scheme.
Check out the tips below and understand what to consider for a fixed deposit scheme.
Effective Tips on How to Choose the Best Fixed Deposit Scheme
Check the Interest Rate of Fixed Deposit
Do you have a preferred bank? Are you aware of the interest rate your bank offer for fixed deposit?
A high-interest rate means you get more money on the principal amount you deposit at the end of the fixed tenure. It would help if you chose a bank that offers the best FD rates. You should not settle for less than 6 or 7% interest rates on fixed deposits.
Sometimes, the economy experiences inflation. Opting for a bank with less than a 5% interest rate reduces the purchasing power of the money you put into a fixed deposit scheme when you don’t beat the inflation.
PNB offers FD schemes with the most attractive interest rates for ordinary people and additional interest rates for senior citizens. PNB FD scheme has an interest rate ranging up to 9%. That’s a good return on your fixed deposit.
Remember, the interest rate is your return on investment, and you should capitalize on it.
Favourable Premature Withdrawal Terms.
You can fix your deposits, but if an inevitable emergency happens, your money should help you. Therefore, you should choose a fixed deposit scheme provider that allows premature withdrawal.
You will pay the penalty for withdrawing your money before maturity. Make sure to choose a financial institution with lower penalty charges. If you opt for the PNB FD scheme, you’re allowed to make a premature withdrawal at friendly charges.
Check the lock-in- period when looking for the best fixed deposit scheme. Some financial institutions will reduce the agreed interest when you prematurely withdraw your fixed deposits.
However, you should avoid any fixed deposit scheme provider that doesn’t pay any interest up premature withdrawal. When you surpass the lock-in period, you should get some interest, if not the whole amount.
Get a Scheme that Offers Cumulative and Non-cumulative Fixed Deposit
If you choose the cumulative fixed deposit scheme, you’re paid interest once at the end of the maturity period. Your interest is compounded into one big lump sum.
On the other hand, the non-cumulative scheme pays interest regularly, monthly, quarterly, or half-yearly. You should go for a fixed deposit scheme that offers cumulative and non-cumulative FD.
If you do not need liquid cash during the entire tenure, cumulative FD will be an ideal scheme for you. When you’re a retiree, you may need cash at regular intervals. Therefore, you can choose the non-cumulative deposit scheme, which pays out fixed deposit interests at intervals.
The Credibility of the Financial Institution
A fixed deposit isn’t a risky investment. But some financial institutions lack credibility and can default repayment. Therefore, you shouldn’t invest in a risk fixed deposit scheme provider. Get a financial company that is well rated by CARE, ICRA, and CRISIL.
You can consider the PNB FD scheme. The bank has a long history of serving the people, and being a government-owned institution, your deposits are safer.
A credible financial institution guarantees you security and the best FD rates.
Check the Complexity of the Application Process
Does your preferred financial institution allow papers application? Besides the best FD rates, you should choose a financial institution with an online application process.
Applying for the FD scheme online saves you transport costs, and you can apply and begin making fixed deposits at the comfort of your couch. The PNB FD scheme application process is quite simple and requires minimal documentation.
Conclusion
Fixed deposits are a safe way to invest your money. Choose a fixed deposit scheme provider that offers higher FD interest rates. Avoid the financial institutions that don’t offer any interest when you prematurely withdraw your money. Some financial institutions have a complex application process.
You should select an FD scheme provider that allows an online application process with minimal documentation.
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