How To Get The Maximum Returns from Fixed Deposit Account
Fixed deposits are the most preferred investment option for Indians. You can seldom find someone who does not have a fixed deposit. However, not everybody gets the same returns.
If you wish to get the highest FD rates from your fixed deposit account, you need to be dynamic and follow the tips mentioned in this article.
The Top-5 Tips to Get Higher Returns From an FD Account
1. Invest in Corporate FDs
A corporate FD account is a sure shot way to get the highest FD rates. Corporate companies like PNB Housing Finance are approved by the RBI and the Ministry of Corporate Affairs to accept public deposits, in addition to disbursing loans like home loan or loan against property. As they do not need to maintain many branches like banks, their cost of operation is low. Hence, they often offer the highest FD rates to depositors.
2. Open an FD Account Online
If you are lucky enough to find a financial institution that offers higher interest rates to investors who invest online, you can get the highest FD rates without moving an inch from your home. All you should do is hit the ‘apply online’ button, fill in your details, upload the necessary documents, and submit the form. In most cases, you will get the FD certificate in your mailbox within 24 hours. Alternatively, some lenders offer the doorstep service facility. Hence, you can fill your personal details by visiting their website, and they will send a representative to the investor’s residence to collect the documents and issue an FD receipt.
Check: Best FD Plan
3. Deposit 15G or 15H
Generally, interest income from corporate FD accounts is not taxed up to INR 5,000. If your interest income is more than INR 5,000, you may deposit Form 15G or 15H to stop the deduction of tax at source. But ensure that you know the income tax rules to not violate the government guidelines while doing so. If you come in tax bracket, you should not submit Form 15G/H.
4. Invest in Cumulative FDs
FD accounts come in two forms – cumulative and non-cumulative. In the non-cumulative mode, you can earn monthly, quarterly, half-yearly, or annual interest. However, if you want to get the highest FD rates, choosing a cumulative FD will be a better decision. With a cumulative FD account, you can get a yield to maturity of up to 9.13% for a fixed deposit of 10-years tenure.
5. Refrain From Closing Your FD Account Prematurely
You may sometimes need money to fulfil urgent needs. However, when you have created an FD account with a long tenure, closing your account early can rip you off the benefits. Usually, financial institutions levy a penalty and offer lower interest rates when you withdraw the amount prematurely. Hence, it is better to keep a small amount in low-duration FD accounts before choosing a long-duration FD for big-ticket investments.
Conclusion
In addition to the top-5 ways to get higher returns from an FD account, you can opt for the auto-renewal mode. It can eliminate the need to keep a tab on maturity dates. Also, if you have senior citizens at home, you can create the FD account in their name. Senior citizens often earn 0.25% to 0.50% higher rates than the highest FD rates for the general public.