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All You Need to Know: How to Choose the Best Fixed Deposit Scheme

by anveshajain

Fixed deposits are becoming increasingly common these days. One reason for this is the rates of return and the safety of the amount invested. When you invest in a fixed deposit, the initial amount is constant, and the interest adds in a given period.

Let’s get started on a few parameters that you must keep in mind for choosing the best fixed deposit scheme.

What are the Factors Determining the Best FD Scheme?

Below mentioned is a list of factors that will help you choose the ideal FD scheme that best meets your needs. 

  • Lock-In Period 

One essential key step to keep in mind while investing in a fixed deposit is its lifetime. It is known as the lock-in period. You must always opt for schemes that ensure your flexibility. It is recommended that you analyze your financial objectives and choose options based on them.

  • Opting for a Mixed Scheme- Cumulative and Non-Cumulative 

Fixed deposits are largely divided into two categories- Cumulative and non-cumulative. Cumulative fixed deposits offer you the interest at the tenure end, along with the interest that is compounded. On the other hand, non-cumulative fixed deposits usually offer you interest regularly. It is recommended that you go for a scheme that is a mix of both cumulative and non-cumulative fixed deposits.

  • Online Applications Fill Up

Always opt for a financial institution that offers you the application process online. It means you don’t have to physically go to the branch or wait in queues to fill in the form manually.

  • Comparing Current FD Interest Rates 

Current FD Interest rates determine the addition to the initial amount deposited you will receive once the tenure is over. While investing in fixed deposits, it is essential to identify the scheme that offers you the highest rates of return. 

  • Documentation Required

The financial institutions require only the necessary documents for fixed deposits. Make sure you provide the basic details like your identity proofs and address proofs. However, in case it is a business-related fixed deposit, it requires basic documents like the incorporation certificate and the financials.

  • Withdrawal Before the Termination

You should opt for a fixed deposit plan that provides you with the opportunity to withdraw before the end of the maturity period. Keep in mind to evaluate and choose the institution that offers the minimum amount as penalty charges. 

  • Credit Scores

There are lesser chances of payment defaults in the case of fixed deposits, and they are secure investments. However, it is necessary to do thorough research to look for an institution with a healthy credit rating. Several agencies like CARE and CRISIL offer financial institutions credibility scores. Keep a check on these scores and opt for a suitable institution.

Conclusion

The above-stated parameters must be followed to ensure you get your ideal fixed deposit scheme. To sum up, your objective must always be opting for increased return rates, lesser need for documents, higher credibility scores, and lesser penalty charges. FD is a trusted financial instrument across the country. Make sure you are starting today.

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