If you have some money in the bank and you have no plans to spend it now, you can transfer it to a fixed deposit account to boost your savings.
Fixed Deposit accounts are a type of savings account that functions on a fixed interest rate for a predetermined period. Once the account matures, the interest is then credited to you, the investor.
Shop for the highest rate from different banks: You have to shop for the highest rates among the banks. This is actually one of the reasons why some depositors have more than one bank.
Roll over your money: You can continue to roll over your money with the interest rate at maturity so that the interest can continue to increase until you need it.
Experts at tech-talk.org explain more ways to improve your returns on your fixed deposit.
Choices: Most banks offer a choice between fixed deposit and recurring deposit. In a fixed deposit, you deposit all your money at once. In recurring deposit, you deposit your money in instalments. Each one comes with a slightly different interest rate, so be sure to check thoroughly.
Fixed returns: In exchange for keeping your deposits safely, the bank offers to pay an interest rate. The longer the term of deposit, the higher the interest rate. You can choose between fixed and floating rates, depending on the market status at that point.
The interest rate will usually increase with the tenure, but in some cases, a three-year duration may fetch more interest than a five-year one. It varies from bank to bank; so be sure to research the interest of the duration you wish to deposit.
Taxation: The interest on your fixed deposit is taxable, depending on your income. You will be charged a certain percentage of the interest that will be paid to you.
Breaking the fixed deposit: If you wish to close your fixed deposit account before maturity, that is withdrawing the deposit before the predetermined date, it will not come free.
Termination of fixed deposit prior to its maturity date (premature withdrawal) comes with its cost as you will not get the full percentage increase. So, keep in mind that once you decide the tenure, you will be earning less than you should as your interest rate.
Income source: If your monthly income keeps you on the edge, then you can opt to get the interest on your fixed deposit monthly.
There are also options of getting it credited annually, or even at the date of maturity. You should also decide on a maturity date, depending on your financial goals and requirements. With the help of a fixed deposit maturity calculator, you can plan your budget well.