Time to Book Your Fixed Deposit?

Have you received any calls recently from your bank or personal banker enquiring about whether you are interested in investing your money in fixed deposits? This is a new trend that has emerged, since almost all the banks including private and public sector banks have raised their rates in fixed deposits across segments.

It seems that bank fixed deposits have once again became the flavour of the season, with higher interest rates in the offing. Bank FDs make for a good proposition for investors, as they offers fixed returns and investors need lose no sleep over market volatility. The fluctuating rates of stocks or NAVs of mutual fund schemes make those investments relatively more volatile.

Encouraging customers to make fixed deposit investments is undoubtedly a marketing strategy by banks, which are always looking to increase their deposit base. However, what it also means is that banks are seeking to compete directly with tax-free bonds, which are being seen as an alternative to bank deposits by many investors. This is the reason why many banks have launched special deposit schemes. These schemes, which have special maturity terms like 365 days, 444 days or 1,111 days, offer higher interest rates than those offered on regular deposits. Such products were successful earlier in 2008 and 2010 too, when banks mopped up huge sums within a short time.

We feel that this festive season is a good time to book your fixed deposits, as your money will remain in safe hands. To help you along, here is a list of fixed deposits and rates offered by leading private and state-owned banks.