RBI may cut interest rate: Top FDs with high interest rates you can lock in; SBI vs HDFC vs ICICI vs Kotak vs Bajaj Finserv

By: |
Updated: April 2, 2019 12:08:41 PM

If you are planning to open a fixed deposit, this small window might be your ideal chance to get the best interest rates before they are revised by the RBI on 4th of April, 2019.

fixed deposit, FD, income tax saving, section 80C benefit, tax saving FD ICICI, SBI, HDFC Bank, axis bank, yes bank, icici bank, hdfc bank, kotak bank, fd rates, Premature withdrawals, Loan facility, Kotak, Bajaj Finserv, reduction in repo rate, RBI,The top 5 things you should know while opening an FD account

The monetary policy committee of the Reserve Bank of India is likely to reduce the repo rate (the rate at which the RBI lends to banks) on April 4. Experts suggest this move could also bring down the interest offered by your bank on your fixed deposits.

Bank fixed deposits are still the most prefer deposit scheme in India. The popularity is generally because of the safe and secure nature of the investment. The principal amount is invested at a fixed interest rate when you invest in an FD, then you can gain interest on your deposits, which accrues and grows over time. Higher fixed deposit rates can get you higher maturity amount. Hence, while choosing a bank, select the lender who is offering the highest interest rates in India.

If you are planning to open a fixed deposit, this small window might be your ideal chance to get the best interest rates before they are revised by the RBI on 4th of April, 2019.

Current FD interest rates of 5 banks

Bank

<1 Year>=1 to <=2 2 to <=33 to <=5

SBI

6.46.86.86.85

HDFC Bank

7.17.37.4

7.25

ICICI Bank6.757.17.5

7.25

Kotak Bank

77.27.1

7

Bajaj FinServ*

88.15

8.75

*Cumulative deposit, Source – BankBazaar.com

The top 5 things you should know while opening an FD account:

Type of Account – You can hold tax-saving fixed deposit either in single mode or joint mode as per your preference. If you opt for a joint account, the tax benefit can be claimed only by the first account holder.

Interest payments – Though the interest rate offered on the FDs vary from bank to the bank even for the same tenure, it also depends on the period for which you are investing in the FD. You can also choose either cumulative option or non-cumulative option, to receive the interest payment. Under the cumulative option, along with the principal amount, interest accrued on the deposit is re-invested and paid at the time of maturity. The interest rates offered are typically higher for senior citizens.

Premature withdrawals – Though pre-mature withdrawals are generally not allowed, however, in case of an emergency, you can break into your fixed deposit account before the maturity date. You will be charged a penalty by the bank on premature withdrawals, which varies from bank to bank.

Loan facility – You can also use your fixed deposit as collateral to get a loan. Only a certain percentage of the principal deposit can be sanctioned as the maximum loan amount. The percentage varies from bank to bank.

Tax – In the hands of the investor, interest received on FD is fully taxable. Tax Deducted at Source (TDS) is applicable on FDs. According to your tax bracket, tax is levied on the interest earned on an FD account. You can also submit Form 15G or Form 15H (as applicable) to the bank to avoid TDS. The interest is payable on monthly or quarterly frequency on the deposit amount. You can also re-invested the earned interest.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Relief for motorists; no change in third-party insurance premium rates
2Post office deposits still offer higher returns than other small savings schemes
3Why you need a personal accident insurance cover