Interest rates are falling and you must ensure that you get maximum from your fixed deposits or Fds. If you are risk averse investor, you would look at various options to make more money from other investments like, shares. However, if you have to stick to FDs, here are some strategies whereby you can get higher returns.
Open fixed deposits account online
You do not get extra interest by opening an account online. What you do get is an option to open at a bank which offers a higher interest rate.
For example, if you open an account in RBL Bank you get an interest rate of 8.50 per cent on 24-month deposit, while in SBI it fetches you an interest rate of just 7.5 per cent.
Look for company deposits
Look for company deposits that are AAA rated, as these deposits offer higher interest rates than bank deposits.
While SBI offers you a maximum interest of 7.5 per cent, a fixed deposit at Bajaj Finserv can offer you an interest rate of as much as 8.65 per cent. DHFL can offer you as much as 9 per cent.
Submit form 15g and 15h
If you see TDS being cut, submit form 15g and 15h, if you do not have taxable income.
This would ensure that tax is not cut and your return would improve.
Apply for cumulative deposits
Try and apply for cumulative deposits, as they tend to compound interest. Banks compound interest every quarter, while company Fds do not. The law of compounding will ensure higher yields in the future
Do not withdraw your deposits early
Remember you should not withdraw your fixed deposits early. There is a penalty that is levied. In most cases banks levy a penalty of 1 per cent for early withdrawal of money before maturity.
Place deposit in the name of parents
If your parents are senior citizens they might end-up getting an extra 0.50 per cent interest on fixed deposits. If they do not have taxable income, it makes sense to open Fds in your parents name.