If you want to park your funds and grow them, there’s no better way to do it than setting up a fixed deposit. Why? Because these financial tools are risk-free and secure, and the best part? The interest rates on fixed deposits are typically much higher than those offered on savings accounts. This means your funds grow much more when parked in a fixed deposit.
And it doesn’t stop there. There are ways to get even higher returns on your investments. Wondering how? Read on.
Four Ways to Earn Higher Interest on Your Fixed Deposit
- Open a Fixed Deposit Online
The most obvious way to earn a higher interest on your fixed deposit is to choose a fixed deposit scheme offering a higher interest rate. And banks typically offer higher interest rates when you apply via the online mode. So go online, compare the interest rates offered by various banks and choose a fixed deposit scheme that offers the highest interest rate.
- Choose a Flexi-Deposit or Auto Sweep-in Deposit
Another way to earn higher returns on your fixed deposit is to opt for an auto sweep-in fixed deposit instead of a regular fixed deposit. Here, your fixed deposit is linked to your savings account, and when the funds go over a limit, the excess funds from your savings account are automatically transferred to the linked fixed deposit. This way, your funds don’t stay idle in your savings account and help you get better returns, thanks to fixed deposit-level interest rates.
- Opt For Cumulative Fixed Deposits
Fixed deposits are term deposits, meaning your funds stay locked in for a specific period, and interest is added to them over time. And when you open a new fixed deposit, you can choose between cumulative and non-cumulative fixed deposits. So, choose a cumulative fixed deposit.
Unlike non-cumulative fixed deposits, these allow you to build a bigger corpus. The reason? Because they compound the returns, meaning any interest you earn is on your funds re-invested along with your principal amount instead of being paid to you in regular instalments.
- Choose a Longer Tenure
Remember, the larger the tenure of a fixed deposit, the better the returns at the end of the term. Why? Because the interest earned is compounded with time. So opting for a fixed deposit plan with a longer tenure is an excellent idea.
However, keep in mind that since fixed deposits are term deposits, you will need to lock in your funds for longer if you choose a long-term fixed deposit. Besides, if you take out your funds before maturity, you will have to pay penalties as specified by your bank. So only choose a tenure you are comfortable with.
Over to You
Fixed deposits offer better returns than savings accounts, thanks to their higher interest rates. But if you want to make the most out of your fixed deposit, the above tips can help you earn higher interest without the risks associated with other investment options.
These days most leading banks offer attractive fixed deposit schemes at competitive interest rates and offer a fuss-free online application process as well. It doesn’t get easier than this. Upgrade from your savings account and open fixed deposits online today!
