Interest rates have edged lower in the last few months and getting decent returns to beat inflation is now becoming a herculean effort. Here are 5 reasons to invest in the IDBI Bank 500 day deposit.
Comparatively higher interest rates
The 500 day deposit fetches you an interest rate of 9.3 per cent, which is the highest among PSU banks.
Though you may find interest rates slightly higher at cooperative and the smaller private banks, those are not government owned banks.
Interest rates may fall going ahead
Since you are investing for almost 18-months, you are hedging against falling interest rates. It is largely anticipated that interest rates in the economy would drop and hence you would continue to get 9.3 per cent, even if interest rates dip.
IDBI Bank is a government owned entity and hence the safety on re-payment of interest and principal is very high.
Yields would be higher since compounding is done every quarter
Some company fixed deposits offer higher interest rates, but they do not compound every quarter resulting in lower yields. However, banks compound interest rates every quarter thus pushing yields higher.
Bank fixed deposits are highly liquid and perhaps the most liquid when compared to company fixed deposits, shares and other saving instruments. This makes the IDBI Bank 500 day deposit extremely attractive.