3 Best Fixed Deposit Strategies To Maximize Returns

28 February, 2024

Synopsis

• Banks offer assured returns on Fixed Deposits.

• You can open multiple FDs for different tenures to maximize returns.

• Avoid closing the FD before it matures.
  
  

A Fixed Deposit or FD is a stable and secure avenue to grow your savings at relatively higher interest rates. The process involves parking an amount with the bank for a fixed tenure and the bank offering interest on the deposited amount either at the time of maturity or through monthly or quarterly payments throughout the tenure. Since the interest rates are not marker-dependent, you can enjoy assured returns. In this article, you can get information on the best Fixed Deposit approaches that can help you earn greater returns.

Three Best FD Strategies to Maximise Returns

Here are some strategies you can consider and grow your FD investments over time:

• Avoid premature closure
  
  You can lose out on your returns if you close your FD before it matures. Banks typically levy a premature withdrawal penalty. Also, you won’t be able to enjoy the compounded returns earned when your interest earnings are reinvested.
  
  In case of a cash crunch, you may consider getting a Loan against the FD. Typically, you can get up to 70-80% of your FD value as an overdraft. You need to pay interest only on the used amount. Also, your FD will continue to earn interest. Typically, you can instantly book the overdraft using your bank’s online banking channels.
  
  

• Cumulative over non-cumulative
  
  Broadly, FDs can be classified into cumulative and non-cumulative deposits. In cumulative deposits, the maturity amount, i.e., principal + interest amount, is paid once the tenure ends. Also, your returns are compounded. This means that the interest you earn is reinvested and added to the principal amount and the returns are calculated on the new principal amount. Typically, banks compound interest every quarter.
  
  In the case of non-cumulative deposits, interest is paid out at monthly or quarterly intervals. For quarterly payouts, interest is calculated every quarter. For monthly payouts, the interest is calculated quarterly as well, however, it is paid monthly.
  
  

Get Superfast Access to the Best Fixed Deposits for Your Needs

As an existing HDFC Bank customer, you can open a Fixed Deposit within minutes, in a completely digital and paperless way. All you have to do is log into your HDFC Bank NetBanking or Mobile Banking platforms, navigate to the option of opening FD, select your tenure and FD amount and provide maturity instructions. What’s more, you can avail of up to 90% of overdraft on your FD via NetBanking and pay interest only on the withdrawn amount.

To Apply for Fixed Deposit Click here!


​​​​​​​*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.