Will Rates on Savings Deposits Fall?

Savings Deposits

From the time we start working, we think of using our hard-earned money wisely, but less do we think of investing it. Idle funds in the savings account of the banks might not benefit you much as you might only get a mere 4-5 percent every year on your deposited amount. On the other hand, investments can be helpful for a secured financial future. Also, it can help you double your accumulated capital.

When thinking of investing, the most common and the most recommended option in India is Fixed Deposits. FD were introduced by the banks and have been in India for a very long time. Due to its investment safety and guaranteed returns, FDs have gained much popularity. Recently, FDs have been in a bad light due to the falling interest rates. The FD rates are expected to fall even more due to the following reasons.

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The Reserve Bank of India (RBI) makes reforms to the policies of the banks and their functioning. Which means the banks have to implement the changes made in their policies if directed by the RBI. Due to the economic conditions of the country, the RBI has made many changes in the bank’s policies that have affected the FD rates. Due to the low FD interest rates, investors are losing interest in Fixed Deposits. Due to the rising inflation, the lenders might lower the interest rates even more which might not give you the expected returns.

During rising inflation, investing in bank’s FDs might not be a wise choice, as the banks lower the FD interest rates. To make your FD investment fruitful, you can take the help of company FDs. Company FDs are provided by the Non-Banking Financial Companies (NBFCs). These companies are not regulated by the RBI, due to which they can make changes in their policies according to their own reforms. Investing in a company Fixed Deposit can get you the following benefits:

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1. Better Returns:
When investing in company FDs, you get the benefit of higher interest rates than the banks. There are NBFCs that are providing 8 percent interest rate on FDs when the banks are providing a mere of 7.5 to 7.8 percent interest rate.

2. Lower Tenure:
Emergencies cannot be predicted due to which you might feel the need of urgent funds at any point of life. If you have invested in FDs with a longer tenure, withdrawing the amount will result in money deductions. To which you can invest in a company FD that have shorter tenure but high-interest rates on FD.

3. Online access:
Investing in a bank FD can take you to the bank on a daily basis if there are any issues related to your FD account. Such is not the case with company FDs; the NBFCs have online portals which can be used to monitor your FDs.

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Even if there is a fall in the FD rates of the banks, you can take the help of NBFCs due to their high-interest rates and better service. The NBFCs tend to offer different perks to a different type of customers that invest in their FDs.

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