(Also Read: Saving Schemes That Are Just A Click Away - Public Provident Fund Vs Fixed Deposits)
Advantages of a fixed deposit
Fixed deposits offer higher returns as compared to savings accounts. The interest payout options that customers can choose help them with regular cash flows or earn even higher interest rates by opting for cumulative interest where the interest is compounded quarterly, thus providing even better returns.
If someone has lump-sum surplus available for investment with a requirement of these funds at a specified date, one may choose to put in to a fixed deposit account, said Puneet Kapoor, Sr. EVP, Kotak Mahindra Bank.
"Fixed Deposits have been a traditional avenue as an investment that provides fixed, safe and reasonable returns. This product gives you a choice to book a deposit for up to 10 years and in a falling interest scenario, one can conveniently opt for a longer tenure and secure returns," Mr Kapoor said.
Given below are interest rates on fixed deposit accounts of State Bank of India (SBI), HDFC Bank, ICICI Bank, YES Bank and Kotak Mahindra Bank
|Banks||Up to 1 year||Up to 3 years||Up to 5 years|
|Kotak Mahindra Bank||7.25%||6.75%||6.50%|
Small finance banks also offer fixed deposit accounts, the interest rates on which are as high as 9 per cent. Fixed deposits are also offered by non-banking finance companies, other corporates, and post offices.
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