Best FD Schemes in 2020 for Indian Citizens

Fixed deposits are one of the most preferred investment instruments opted by Indian populace, especially the risk-averse section. From bank deposits to NBFC deposits to post office time deposits, investors have a wide range of options to choose from. There are various factors that make a scheme worthy of investing, like, if it offers the best FD rates, if the tenure is flexible enough and most importantly, whether the scheme is safe enough to park one’s hard-earned money in it. Let’s talk about these in detail.

First of all, let’s have a look at the best fixed deposit interest rates offered by banks, commercial as well as small finance banks, in 2020.

Best FD Rates in 2020

• Small Finance Banks

• Commercial Banks

Best FD Schemes: Features & Benefits

The aforementioned are the interest rates offered by banks in fixed deposits. Now let us understand the schemes (regular FD schemes) where these FD card rates are applicable so as to know what you will gain out of your investment:

1. Fincare Small Finance Bank Fixed Deposit
   1. Flexible tenure ranging from 7 days to 7 years
   2. Flexible Interest Payout – Cumulative and Non-Cumulative (monthly/quarterly)
   3. Up to 9% FD rates on deposits up to Rs. 2 crore
   4. 0.5% extra fixed deposit rates for senior citizens
   5. Flexible renewal & pre-closure terms

2. Utkarsh Small Finance Bank Fixed Deposit
   1. Tenure ranging from 7 days to 10 years
   2. investment of Rs. 1000
   3. Hindu Resident, HUFs, Sole Proprietorship Firms, Partnership Firms, Ltd. Companies and Trust Accounts are eligible to open FD
   4. A nominee can be appointed online

3. Suryodaya Small Finance Bank
   1. Tenure ranging from 7 days to 10 years
   2. Affordable deposit amount starting from Rs. 1,000
   3. Traditional (non-cumulative) and cumulative options available
   4. Extra 0.5% FD interest rates for resident senior citizens
   5. Simple interest paid for deposits maturing in less than 6 months
   6. Quarterly compounding of interest for deposits maturing in 6 months and above
   7. If FD is withdrawn before 7 days from the date of opening, no interest payable

4. North East Small Finance Banks
   1. Tenure of 7 days to 10 years
   2. A minimum deposit amount of Rs. 1,000
   3. Partial withdrawal facility available
   4. Auto-renewal facility
   5. Reinvestment (cumulative, where interest is compounded and paid on maturity) option available

5. Jana Small Finance Bank
   1. Tenure starting from 7 days and goes up to 10 years
   2. An easy-to-start initial deposit amount of Rs. 1,000
   3. Option to choose cumulative and non-cumulative option (monthly/quarterly/half-yearly/yearly)
   4. Easy to apply via mobile banking app

6. IDFC First Bank Fixed Deposit
   1. Flexible tenure from 7 days to 10 years
   2. Additional 0.5% interest rate for senior citizens
   3. No penalty for senior citizens on premature withdrawal/closure
   4. Simple interest for a tenure of up to 180 days
   5. Quarterly compounding for tenure above 180 days
   6. Monthly interest option available at discounted rates over the standard card rates

7. DCB Bank Fixed Deposit
   1. Tenure ranging from 7 days to 10 years
   2. Minimum deposit amount for Rs. 10,000
   3. Flexible interest payment option (cumulative/non-cumulative)
   4. Monthly, quarterly, yearly and half-yearly interest payout for non-cumulative option
   5. Facility to take a loan for up to 80% of the deposit amount

8. RBL Bank Fixed Deposit
   1. Booking period (tenure) ranging from 7 days to 20 years
   2. Nomination facility available
   3. Partial withdrawal as well as total premature withdrawal options available
   4. Easily accessible via mobile banking and internet banking as well (for RBL A/c holders)

9. Yes Bank Fixed Deposit
   1. Tenure ranging from 7 days to 10 years
   2. Auto-renewal option available
   3. Overdraft facility available
   4. Sweep-in facility provided
   5. No penalty on premature withdrawal
   6. Inter-city transfers available

10. IndusInd Bank Fixed Deposit
    1. Investment tenure ranging from 7 days to 5 years above
    2. 0.5% extra FD rates for senior citizens
    3. Partial withdrawals allowed
    4. Interest can be received monthly, quarterly, half-yearly, annually or on maturity
    5. Interest payable by crediting to linked savings/current account
    6. Auto-renewal option & nomination facility provided

How to Choose the Best Fixed Deposit Scheme

For those looking to invest in fixed deposits, there are various FD schemes available. To select the best scheme, here are some of the important factors that’ll help to make a financially sound decision:

• Look for high FD rates

Check and compare fixed deposit rates offered by various banks and choose a bank which provides the highest interest rate at your preferred tenure. Most of the banks provide the same FD rates or in the nearby range of rates for deposits maturing in less than 1 year whereas, for a tenure of 1 year and more, rates might differ. So, do a thorough analysis to select a scheme which suits your goals while providing you with higher returns.

• Pick the apt tenure

Before investing in a fixed deposit, it is important to have a financial goal in mind, i.e. is it to address a long-term aim like buying a house in say 10 years down the line or is it a nearby milestone like higher studies within 1-3 years. Depending on your goal, you should lock your FD for a suitable tenure so as to earn favourable returns over the period of time.

Also, check the market trend. If there is a rising interest rate regimen then you may want to consider investing for a shorter tenure and reinvest as the FD matures at higher FD interest rates. Otherwise lock your money for longer tenure with the highest FD rates you can find at present so that if later in time the interest rates fall down, you are not at loss.

• Hunt for a bank with lower/no penalty on premature withdrawal

Although it is not suggested to withdraw a fixed deposit prematurely more often than not, we all face cash crunch where self-financing by withdrawing one’s FD before time proves to be a viable option. Banks usually charge a penalty of 0.5% – 2% on premature withdrawal. Some banks like YES Bank do not charge any penalty on dissolving your FD before time (T&C apply). Considering this, you may save yourself a considerable amount in a penalty (depending on the FD amount).

• Pick a provider with a good rating

Checking the credibility of the bank plays a vital role in making the right investment decision. Some banks or non-banking financial companies may be offering higher fixed deposit rates but they might be lacking in a good rating.

A bad or low rating indicates higher chances of default which simply means delayed or no repayment of FD amount. DHFL is a recent example to learn from. The housing finance company quickly went into default and those who invested their money in the company’s fixed deposit are now experiencing hard luck.

• Choose the Interest payment option wisely

There are two types of interest payment options, viz. cumulative and non-cumulative. In cumulative option, interest is accumulated and compounded over the period of deposit and paid on maturity. This leads to higher returns, thanks to compound interest (interest on interest). This option should be chosen if you have a regular income and do not need a top-up to make the ends meet.

In case of a non-cumulative option, interest is paid to the depositor on the frequency chosen at the time of booking the FD. The frequency can be monthly, quarterly, half-yearly or yearly. This is better for retired people, housewives, etc. who do not have a regular income.

• Look for additional benefits

Apart from the above-mentioned points, you should not miss out on some of the additional benefits extended by banks and NBFCs, These may be sweep-in/sweep-out facility, overdraft facility, online access, appointing a nominee during the tenure of FD, etc.

Loan against FD or overdraft facility is an option where depositors can take loan by putting their FD as lien with the bank. The interest rates are lower as compared to unsecured loans and disbursal is quick. This comes handy when you need a smaller amount than your FD and do not wish to encash the FD prematurely. This way, you finance your emergency requirements while simultaneously earning interest on fixed deposit too.

In case your savings account is falling short of funds, sweep-out facility activates and transfers the deficit in the account from FD. Similarly, for the sweep-in facility, excess funds in the linked savings account are transferred to the FD account. The limit is decided by the depositor in both the options.

In addition to this, it is very important if the FD account can be accessed online. This way you can make changes in your account anytime, anywhere.

Conclusion:

To sum it up, the best fixed deposit scheme is the one which augments your savings to the maximum while keeping your hard-earned money safe. This means highest FD interest rates must be offered in the scheme and the provider (bank or the NBFC) must be credible enough, i.e. certified by credit rating agencies like CRISIL, ICRA, etc.

So when you find the one that meets these requirements along with all the points explained through the length of this article, save yourself the delay and park your money safely.

Also, note that FD is best suited for those who want to preserve their capital while earning a regular income on the same. If you are looking for rapid growth and are not much shy of market risks, fixed deposits may not be the best option for you.

Thus, have a clear idea of what you want from your money and if investing in an FD brings your goal closer, go for it. Compare the best FD interest rates offered by various banks, check the credibility of the provider, pick a suitable tenure and relax as your money multiplies aloof from market-related risks.