The Reserve Bank of India has hiked the interest rates after four years which is only going to affect many investment instruments. Among these instruments fixed income instruments like bank and company deposits are severely going to be impacted through this. However, the impact would be varied across all these instruments. Bank deposit might gain from it, while bonds and long-term debts funds might bear the brunt of it. Senior Citizen Schemes and PPF are likely to gain from this decision, even though their rates might not rise soon.
Fixed Deposits are one such investment instrument which won’t be impacted much. Company Fixed Deposits are not associated with market risks. Experts say that the current interest rates on FDs are only going to rise. However, you can manage your investment Plans by investing in other instruments along with FDs. You can even diversify your amount in multiple FDs and keep earning a higher interest rate. NBFCs like Bajaj Finance offer an attractive interest rate ranging between 8.75% – 9.10% on a flexible tenor of 12 to 60 months.
How to Take Advantage of Increasing Interest Rates
You can open an FD with a small amount of Rs. 25000. However, this amount varies from company to company. Leading NBFCs like Bajaj Finance provide the facility of opening an FD with this amount. Also, you can choose your preferred tenor. Some companies also offer special tenor schemes under which you get a higher interest rate. However, in those schemes, the minimum amount that you have to invest would be higher too.
You can easily withdraw amount from FDs to meet your daily expenses. However, if you invest in a tax-saving FD, you can’t withdraw any amount before the FD matures. This is because they have a lock-in period of five years which locks your money for a period of five years. There is also an option of pledging your FD account as collateral. It means if you need urgent funds in case of any emergency, you can take a loan against FD. You won’t need to pledge any additional funds, as your FD serves as the security.
The interest payouts are flexible among Cumulative and Non-Cumulative FDs. If you want to earn an interest directly after the FD matures, you can invest in a Cumulative FDs. Whereas, if you need flexibility of interest payouts, you can invest in Non-Cumulative FDs. Under this option, your interest payouts will be either monthly, three-monthly, six-monthly or on yearly basis.
When you withdraw the amount prematurely from an FD, there is a nominal penalty charged. However, NBFCs like Bajaj Finance don’t charge any such fee. If you open an account as a senior citizen, or in their name – you can avail an additional interest rate of 0.35% over the base rate. If you are already a customer of Bajaj Finance, you can get an additional interest rate of 0.25% over the original rate.
Investing in Bajaj Finance Fixed Deposits
One of the top NBFCs like Bajaj Finance offer you the facility of easily opening an FD with minimal documentation process. You can easily browse through the website and calculate your earnings, the principal amount you want to invest, and the maturity amount at the end. All you have to do is use an online FD Interest rate calculator provided on the website and move the sliders to choose your amount. Bajaj Finance provide services across 200 plus branches in India where you can also open an FD through offline process. Apart from the flexible tenor of 12 – 60 months, there is a special tenor scheme of 15 months. Under this, the minimum investing amount is 1 Lakh and the rate of interest is charged at 8.05% on a Cumulative basis. You can also renew your FD after it matures with an additional interest rate of 0.255 over the base rate.