6 Smart Strategies To Increase Returns On Fixed Deposits

It has been a boon for investors looking to invest in fixed deposits, as interest rates have trended higher over the last 1 year, wherein, the RBI has hiked repo rates sharply. Here are a few ways that you can increase your interest rates on fixed deposits.

Compounding

If you see banks compound interest rates every quarter. On the other hand some post office schemes like the National Savings Certificate compound interest every year. This means that your yields would dip when compounding every year. It is therefore advisable to go for schemes that compound interest every year.

Online deposits

Some banks and NBFCs in the past had offered higher interest rates if investors applied through the online mode. It is therefore, important to look at investing avenues through online mode as well. However, what we do believe is that the higher interest rate offered would be small.

Submit form 15g and form 15h

In case you are not liable to pay income tax, in the sense your income is below the tax payment limit, you can submit form 15g and form 15h. Banks tend to deduct TDS in case the interest amount is more than Rs 10,000 at banks.

Look at NBFC deposits

Some AAA NBFC deposits offer interest rates that are as high as 8.36%. So, do look at these deposits as well, just in case you are only applying for bank deposits. Here again, what is paramount is that one applies for deposits that are safe.

Go for longer term tenure of deposits

In the present context we believe that the interest rates are at its peak. Most analysts and observers believe that from here on, interest rates could drop lower. It is therefore more prudent to look for deposits that have a longer duration so you block money at higher interest rates for a longer period.

Look for safety

Last but not the least, look for safety before investing in any fixed deposits.