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FD Interest Rates: Current Fixed Deposit Interest Rates in 2020

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Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory.

The economic slowdown might have worried investors across the world but you can still grow your savings by investing in a safe instrument like FD. 

However, the reduction in repo rates and RBI’s measures to revive the economy by increasing the liquidity have put additional pressure on the banks. As a result, banks have reduced their interest rates and this has affected senior citizens who manage their finances through the interest generated by the fixed deposit plans. 

Therefore, a better option would be to go for fixed deposit schemes that offer higher interest rates. Investing in a tax saving FD is also a good option because you can claim tax deductions as per section 80C of the Income Tax Act.  

Though bank FDs are going through a downward trend when it comes to the interest rate, some finance companies are still offering a lucrative FD interest rate. 

One such finance company is Bajaj Finance which is offering interest rates as high as 7.35%. This means that you get almost 1.5 to 2% additional interest rate than the bank FDs that offer around 5 to 5.5% interest rates these days. 

Check the below table to see how this extra interest rate will translate into actual returns if you invest an amount of Rs. 10,00,000 for 5 years.

Fixed DepositInterest Rate Amount Tenor Interest (In Rs.)Maturity Value (in Rs.)
Bank FD 5.5% 10,00,0005 years3,14,06613,14,066
Bajaj Finance FD 7.35%10,00,0005 years 4,39,31014,39,310

You can notice the difference in the interest earnings and final maturity value. If you invest 10 lakhs in a bank FD at a 5.5% interest rate then your savings will grow by 31.4% after 5 years whereas Bajaj Finance FD will grow your savings by 43.9% with the same principal amount and tenor.

Apart from the noticeable difference in the earnings, it is also the best option due to these features:

An ideal choice for senior citizens 

Senior citizens get a 0.25% higher interest rate on booking these FDs. Not only that, but they can also choose a monthly interest payout to cover their monthly expenses.

Simple investment process 

Apart from the higher interest rate you also get an additional interest rate of 0.10% on booking an FD online via an online FD form. This means that you do not have to visit a branch office. 

You can start investing in an FD with only Rs. 25,000 now. Those who are not able to invest a lump sum amount in one go can opt for the SDP (Systematic Deposit Plan) that allows you to start depositing a minimum amount of Rs. 5000 every month. A total of 6 to 48 deposits can be made under the SDP scheme and each of these deposits can be locked in for a tenor up to 60 months as per your requirements. Moreover, interest rates prevailing on the deposit date will be applicable on every deposit, thus enabling you to lock-in prevailing high rates. 

Highest credit ratings 

Always go for the investment options that have received the highest credit ratings by renowned credit rating organizations. Bajaj Finance FD has received MAAA/stable ratings by ICRA and FAAA/stable ratings by CRISIL.  These credit ratings indicate that your investments are safe and you will receive the returns without any delay once your FD matures. 
The economic condition is not stable and therefore, you must go for the fixed income instruments to ensure that your invested capital is safe. Currently, one of the best and safest investment options is fixed deposit since it offers a fixed interest rate to the investors. However, banks have lowered their FD interest rates owing to the repo rate cuts, pressure of increasing liquidity, etc. Therefore, you can think of investing in corporate FDs like Bajaj Finance FDs that are still offering high fixed deposit interest rates up to 7.35%. These FDs are also safe as they are highly credited for safety and stability by credit rating organizations like ICRA and CRISIL.

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