Not happy with bank fixed deposits? Check out alternatives
For a secure and assured investment, you may prefer to park your funds in FDs. Though fixed deposits were traditionally offered by banks, they are now also offered by companies. Usually, bank FD interest rates are lower than company FD interest rates; however, bank FDs are absolutely risk-free as they are guaranteed by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC). So, to ensure that you pick company FDs that are reliable and safe, choose those that come with a high safety rating by agencies like CRISIL and ICRA.
Apart from lower interest rates, bank FDs do not offer easy withdrawal options, and do not have a robust system of informing you to claim or renew your FD before maturity. Company FDs in this regard, give you more convenience. An easy way to select between these two options is to use an FD calculator to compare the gains from varying Interest rate on Fixed Deposit and then choose the best FD for yourself.
Here are the alternatives to bank FDs:
Non-banking financial institutions
- Government owned
- Privately owned
- Housing finance companies
- Post offices
Apart from interest rates, consider other benefits that are associated with company FDs to make an informed decision.
Earn higher returns at lower risk
Company FDs offer higher returns as compared to bank FDs. This makes them one of the most preferred alternatives to bank FDs. To earn good returns and enjoy exciting features on your investment, you need to compare and select the issuer that offers the highest FD interest rates. Bajaj Finance, for instance, offers Fixed Deposit interest return of up to 8.75% on an FD started for at least 36 months that offers returns at maturity or up to 9.10% on the same FD in case you are a senior citizen.
Free to choose the type of FD
In general, you have two types of FD schemes to choose from: those that offer returns at the end of the tenor and those that offer frequent payouts. When you want to earn regular interest on monthly, quarterly, half-yearly, or annual basis, select the latter. However, if your long-term financial goal is to grow your wealth over a period of time, invest in the former FD. This FD allows you to benefit from compounding and thus gets you higher returns.
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Get higher stability on your investment
To protect your investments from loss, invest in a FD with Bajaj Finance as they are highly stable and credible. This is because Bajaj Finance boasts of CRISIL’s highest FAAA rating and ICRA’s highest MAAA rating, which ensures safety and security of your investments. This means that not only will they never default on giving you the interest earned, but they will also never put your principal at risk. So, when you choose a company FD based on ratings, your savings are sure to be safe.
Start an FD with lower minimum deposit
Even if you have just started earning, you can start investing in a company FD as the minimum deposit required is very low. You can start a Bajaj Finance Fixed Deposit by investing just Rs.25,000. This minimal cap encourages you to start investing at an early age so that you are able to accumulate a huge corpus for your long-term goals.
Easily fund your emergency needs
Emergencies are unpredictable and usually require fast cash, which you may not have easy access to. To tackle such urgent expenses, you can prematurely withdraw your FD by paying a small penalty. Moreover, you can cater to your immediate financial needs in another way by availing a loan against FD. With this loan you can cover your financial needs without losing out on your FD interest. In this regard, the interest rate on the loan is most likely to be 2% over and above your normal FD interest rate, which makes borrowing cost-effective.
Now that you know why company FDs are good alternatives to bank FDs, make your final decision based on your financial needs and your tax liabilities. Once you have made your decision to invest in a company FD, calculate your potential returns using an FD calculator. Then you can apply for a FD online in few simple steps and earn good returns.