FD Interest Rates: All You Need to Know About Them!


When deciding on a fixed deposit, you may be inclined to pick the one with the highest FD interest rate. This makes sense, considering that the FD interest rates dictate the earnings, so getting a high rate is the best option. However, there’s more to it than that. 

The FD interest rate is impacted by several economic factors, which in turn impacts your earnings. Thankfully, the fixed deposit is among the few fixed-income instruments, and this is one of the primary reasons for its popularity. You can introduce it to almost any portfolio and reap the benefits it has to offer. 

However, before you invest and begin to optimise for the FD interest rate on offer, you should understand all you can about the rates. To that end, take a look at the following pointers.

Key Things To Know About FD Interest Rates Before Investing

While you may be aware that fixed deposits offer fixed returns once booked, issuers do change FD interest rates every now and then. The main reason for varying interest rates is the influence of macroeconomic factors and policies. 

Some of these include the changes implemented by the Reserve Bank Of India (RBI), which go on to affect other benchmarks. This is why it is important to understand FD interest rates before investing. Aside from these economic factors, the FD interest rates will vary based on the investment window. 

If you choose a short investment timeline, your interest rate will be lower as compared to the rate offered for a longer timeline. For instance, if you choose a short tenor of just 1 year, your interest rate is generally lower than the rate you get if you were to invest for 3 years. 

FD Interest Rates

Some issuers also provide a higher rate of interest when you select a specific tenor. These are special features, but are another factor that impacts the FD interest rates you get. Additionally, the investor profile is also another key player. 

Issuers offer different rates for non-senior citizen and senior-citizen investors. This difference can be quite significant, and should be considered before you invest. Finally, the FD type also has a hand in determining the FD interest rates you get. 

Generally, you can choose between a cumulative and a non-cumulative fixed deposit, and the rates offered for each differ. However, in most cases, the FD interest rates for a cumulative fixed deposit are higher. 

Know About The Economic Factors That Affect FD Interest Rates

Considering that there are many factors responsible for fluctuating interest rates, you should know more about them before you invest. This is particularly important when considering macroeconomic factors, as they can affect your investing decisions. After all, timing your investment is key to maximising your returns for a given timeline.

Here, the repo rate levied by the RBI is particularly important to note as an investor. This rate is constantly changing, and it directly impacts the FD interest rates on offer. If the repo rate increases, so do the FD interest rates offered by issuers.

FD Interest Rates

As such, it is important to keep track of such changes and decide accordingly, based on the expected movements by the RBI. Another vital aspect is the inflation rate of the market. RBI may increase the repo rate to counteract the rising inflation, and this points toward opportunity. 

In any case, regardless of the economic movements, you should check if the issuer has reacted to the rate changes before you invest. In some cases, there may be a lag in offering revised rates, so do the due diligence before you invest. 

Invest And Earn Generously With The Special FD Interest Rates For Senior Citizens

Senior citizens are usually offered higher rates as compared to those offered to non-senior citizen investors. Generally, the FD interest rates for senior citizens are usually 0.2-0.5% more than the base rate. This is quite a significant bump. 

As an investor, this means that you can lock your corpus in for a lengthy tenor and enjoy the gains throughout. However, do note that the FD rates for senior citizens are also impacted by the FD type. 

Here is a table to highlight a few issuers with high FD rates for senior citizens.

Financial institutionFD interest rates for senior citizens
Bajaj Finance7.95% p.a.
PNB Housing Finance7.65% p.a.
Mahindra Finance 7.75% p.a.
SBI6.90% p.a.

Disclaimer: The above-mentioned rates are as listed on official issuer websites and are subject to change. 

These are some of the lucrative FD rates for senior citizens you can opt for, and it is important that you do a comparative analysis of the issuers in the market. Remember that you also need to consider the other features of the instrument, besides the FD interest rates. 

This assessment is crucial to choosing the right issuer and finding an instrument that allows you to truly maximise your returns. Thankfully, it is very easy to find an instrument that has the features you need. You can find the best FD offers online or simply visit an aggregator platform to get the best deal for you. 


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