What is the interest rate of FD in 2022?

A fixed deposit, or FD, is an investment account. Banks and other financial institutions provide it. The investor can deposit a good amount of money in history, and they will get back a fixed interest rate depending on the tenure. The tenure can be selected from 7 days to 10 years. Generally, the interest rate of an FD account is much higher than that of a savings account.

How do interest rates work?

Typically, interest rates are added monthly to the investor’s fixed deposit account.

The customer can get the benefit of interest every month or on a quarterly basis. The investors can withdraw their investment once the tenure of the investment ends. The customer will also have the option to reinvest the money for another term. As per the investor, the assignment will be maintained. The interest rate of an FD can vary from bank to bank. Generally, all banks and other financial institutions offer fixed deposits. Another thing to know is that the interest rates offered by private sector banks and other private financial institutions will be higher. The public-sector banks and financial institutions will provide a slightly lower interest rate on the fixed deposit accounts.

Different types of FDs

There are different types of FD accounts offered by banks. The interest rates on the various types of FD accounts are slightly different. Some different types of FD accounts are- 

1. Regular FD account 

These are for customers aged below 60 years old. The interest rate of FD offered on these accounts is lesser than the one offered for a senior citizen FD account.

2. Senior citizen FD accounts 

These are for customers above the age of 60 years old. The interest rate of FD offered in these accounts is slightly higher. The amount of interest in these FD accounts can be used by the senior citizen to handle their expenses like medical bills, etc.

3. FD account with a monthly payout 

These fixed deposit accounts will pay out the built-up interest to the customer every month without any inconvenience. This FD account has the advantage of getting the interest component directly into a saving account. The investor can use this money every month and use the sum for regular expenses.

4. FD account with a maturity payout

In this kind of FD account, the interest gets collected in the customer’s account based on the deposit tenure. The interest gets compounded. Later, the customer will get the principal amount plus the interest components. By the time of the maturity of the FD account, the investor will get the principal and the interest components.

Rates of interest offered by banks 

The interest rate of an FD keeps changing from time to time. Another thing to remember is that the interest rate mainly depends on the tenor. The government bank offers different rates of interest than the private banks. There is a margin of difference between the two of them. Most public banks will offer interest in India in 2022 ranging from 3% to a minimum of 6% or a maximum of 7%. The general tenure for public bank fixed deposit accounts can range from 7 days to 10 years. 

Now let’s learn about the interest rates of FDs offered by the private sector banks and financial institutions. In general, private banks offer interest rates that range from a low of 2.50% to a high of 7.20%. Private banks offer fixed deposit accounts at an average interest rate of between 3% and 7%. Sometimes, it can cross 7% just by a slight increase. The average tenure of private banks’ fixed deposit accounts is also 7 days to 10 years. But exceptions can happen in this case.

In some cases, the tenure goes from 15 days to 10 years, but in other cases, it can be between 33 and 99 months. The investor needs to check out all the possibilities. The customer can compare the tenor with the interest rate of an FD offered by public and private sector banks and then decide which one they should go for.

Things to consider before investing in fixed deposits 

Deposit limit

Investors should always consider the deposit limit of the bank from where they are making their fixed deposit accounts. It refers to the maximum amount of money that a bank offers for a fixed deposit account. Banks use these amounts of money to confirm whether they will offer you a fixed deposit. 

Interest rates 

It is the most important thing to consider before investing in a fixed deposit account. The interest rates on fixed deposit accounts are different at different banks. Some might offer higher interest rates based on the rating and financial capacity. The customer should thoroughly go by the interest rates of an FD offered by the bank and tenure and then analyse them before making any decision.

Tenure 

It is important to know about the duration of the whole process. The investor must know how long the money will remain in the bank. Most banks in India decide the interest rates of the fixed accounts based on this duration, known as the tenure. So, before investing in a fixed deposit account, the customer must keep tenure in mind.

Conclusion 

Now that it’s the end of the article, if the customer has a large amount of money that they want to save, opening up a fixed deposit account is the best solution to invest that amount of money. It’s safe and will provide you with a good interest rate of an FD for that amount of money.  Even though it’s safe, you should still look into things like payouts, risk calculations, real interest rates, etc. One can take help from Piramal finances as they deal with personal loans and finances.