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HomeMoneyHow to Choose the Best Fixed Deposit Plan?

How to Choose the Best Fixed Deposit Plan?

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Banks provide fixed deposit (FD) plans for safe investment. Despite rising stock markets, it is one of the oldest investing strategies that is still relevant today.

Fixed deposits offer risk-free profits compared to returns on many mutual funds that are much riskier.

In essence, guaranteed returns and zero risk make FDs profitable. This post is for you if you’re trying to figure out how to choose the best Fixed Deposit plan for 2022.

How do I choose the best-fixed deposit plan?

You can choose the best FD plan by considering the following:

#1 Interest Rate

When evaluating several FD plans online, the bank offering the highest fixed deposit interest rate should be the first thing you consider. The interest rate represents the percentage of return you will receive on the principal amount when your FD matures.

What Should Depositors Do? Preferably, select a plan with the highest interest rate on a fixed deposit. Avoid banks that offer interest rates of less than 7%. This metric determines your total return on investment (ROI). Also, choose the bank offering senior FD holders or retirees higher interest rates. Seniors over 60 can earn an extra 0.5% interest rate on fixed deposits.

Interest rate best fixed deposit plan

#2 Flexible tenure

The lock-in period is the second crucial factor you should look into while investing in an FD. There is a lock-in period during a fixed deposit plan’s tenure or lifespan. Usually, a tax savings FD comes with a five-year lock-in period. During this period, you can’t withdraw your funds. While selecting a bank, see what their lock-in period is. This helps you gain knowledge of your FD tenure and lets you know after how long you’ll be allowed to withdraw the deposit.

#3: Cumulative FD vs. Non-Cumulative FD:

Essentially, the two FD variations differ in terms of interest payout frequency.

A cumulative FD only pays interest on maturity. A non-cumulative FD pays interest at predetermined intervals, such as monthly, quarterly, half-yearly, or yearly.

#4: Hassle-Free Application Process

In addition to seeking the highest interest rate for a fixed deposit, you should select a bank with a completely paperless application.

Today banks facilitate the opening of FDs through a variety of methods, including:

  • Internet banking
  • Mobile banking apps

Initiate the online application process while lounging on your couch. Furthermore, in today’s technologically advanced day, even if you are a working person, you wouldn’t need to take a day off from your job to visit the bank’s branch. All you need to do is watch your savings grow over time. And this can be done when you choose the highest FD return plan.

#5: Minimum Documentation

In addition to the online application and monitoring process, you must ensure that the financial institution requires only a few necessary documents.

The best fixed-term plans make life simple for depositors and require less documentation.

Documents Required for Identity Proof (Anyone of the given below):

  • Passport
  • Voter ID card
  • PAN card
  • Driving license
  • Photo ration card
  • Government ID card
  • Senior citizen ID card

Documents required for address proof (anyone of the given below):

  • Passport
  • Electricity or Telephone bill
  • Certificate issued by Post office
  • Bank statement with check

#6: Premature Withdrawals

Premature withdrawal privileges let depositors withdraw money from their fixed deposit program before maturity. These are some of the essential elements of any FD. Choose a bank offering this option of premature withdrawal if you want the best-fixed deposit scheme in the nation.

#7 Credibility

Try to locate a reputable FD provider; research and check their credit ratings. Numerous credit rating organizations, including CRISIL, ICRA, CARE, and others, rate these banks in India.

Conclusion

Now that’s all about the best fixed deposit scheme and its parameters to get an ideal fixed deposit plan. As a depositor, you should aim to get the highest interest rate on your FD with a premature withdrawal facility and the lowest penalty. Decide on the bank based on the application and documentation process.

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