Kotak Mahindra Bank, for example, offers 7.2 percent interest for 390 days. This is 364 days, which means that those opting for a one-year fixed deposit offer only 6.2 percent. SBI, a public sector bank, offers 5.75 percent interest for a fixed deposit scheme. Instead, for those opting for the 400-day special fixed deposit scheme, an additional 1.35 per cent will be added. 7.10 percent interest is available.
More than this, the small finance bank Utkarsh Small Finance Bank is the top among them in offering higher interest on fixed deposit scheme. The bank offers 9.25 per cent interest to senior citizens on special fixed deposit scheme that matures in 700 days. Unity Small Finance Bank offers 9.50 percent interest to senior citizens on fixed deposit scheme with maturity of 1001 days.
Investing in such a special fixed deposit scheme can earn you a higher rate of interest ranging from 0.25 percent to 1.35 percent in a short period of time compared to a regular fixed deposit scheme.
Determine the tenure of deposits. The dates specified in these special schemes generally correspond to the assets and liabilities of the bank during a particular period.
For example, if the bank has a high demand for 2-year loans, it will offer 700-day deposits. To put it simply, banks make sure they have enough money and lend to fixed deposits by extending the tenure. Banks offer loans in a wide range of terms and rates.
How to choose the right plan?
In case of fixed deposit scheme, the investment will grow depending on the number of years you choose. If you want a relatively good rate of interest, you can opt for a special fixed deposit scheme. Otherwise, you can opt for short term deposit scheme.
In the current environment of rising interest rates, choosing a short term will allow you to reinvest it again and earn higher interest for some quarters.
Things to consider before investing:
Special deposit schemes, which offer slightly higher interest than regular deposit schemes, cannot be withdrawn before maturity. For those who want to get higher maturity amount through deposits, it is better to invest between special term and regular term. Fixed deposits can be invested with maturities at different times.
All fixed deposits avoid maturing at the same time and reduce the risk of high and low interest rates. Regardless of which plan you choose, it’s best to avoid the auto-renew option. This will enable you to choose the right deposit scheme.
Finally, don’t invest in any bank because of high interest. Make sure the bank is safe and reliable. As listed banks, small banks, and RBI’s Deposit Insurance Credit Guarantee Corporation come under the umbrella, investments up to Rs 5 lakh are covered.
And this applies to both investment and interest. Investors can start their fixed deposit scheme with many banks. The total amount of deposits in each should not exceed Rs.5 lakhs.