Fixed Deposits are one of the safest investments you can make in India. A regular fixed deposit will earn you 6-7% per annum on your money, which is pretty fine. However, if you really want to squeeze the last drops of juice out of your investment and make the best use of it, here are 7 hacks that will help you do just that. By focusing on these hacks, you can definitely improve your earnings and earn more percentage on your deposit.
Choose a Long Maturity Period
With FDs, there’s a trade-off between return and safety. The longer you keep your money in a PNB fixed deposit, which is essentially lending it out to banks, insurers, and other corporates, the higher your returns will be.
On account of inflation, interest rates fall as time goes by—which means that if you don’t have a long investment horizon, you may end up earning less interest than what is actually accounted for by inflation.
A good idea would be to go for a five-year FD or even more at times; as it compounds your money over time and increases the chances to maximize the returns.
Spread FDs to Different Tenures
Investing in multiple deposits of varying tenures can also boost your returns. You’ll earn interest for a longer period, and you’ll be less affected by inflation. You can put half of your investment in one-year deposits, 25% in three-year ones, and 25% in five-year FDs. Moreover, you can later reinvest in the long-term PNB fixed deposit once the short-term fixed deposit gets matured.
Go For Tax Saving FDs
FDs are a great option for tax savings. So, if you have not done it till now and want to maximize your returns, consider investing in PNB fixed deposit interest rate FDs that offer tax benefits. To avail of the tax benefits on FD, invest in minimum 5 years fixed deposit because as per the income tax act the 5 years FD is automatically eligible under Section 80C and an individual can save up to 1.5 lakh on tax in a financial year.
Invest in Multiple Small FDs
If you have a lump sum of money that you’re thinking of investing in an FD, stop and think about it for a minute. Instead of depositing your money in one big FD, why not spread it across multiple smaller ones?
Chances are, you’ll find banks that offer better interest rates on smaller deposits than they do on larger ones.
Senior Citizen FDs
If you have grown up with your parents, or are still living with them, it would be a good idea to open FDs in their name. This way you can earn more interest on the principal amount as banks and NBFCs takes the applicant’s age into consideration. It’s good to start a fixed deposit in the name of your parents if they are above 60 years of age.
Compare Different FD Plans
In some cases, banks may have a lot of infrastructure costs and other commitments, so they may pay less interest than others. However, you can compare PNB fixed deposit interest rate with FDs from other financial institutions for a more informed decision. Banks may also have stricter rules for FD investment, like not allowing you to withdraw before maturity or depositing money in installments.
Avoid Premature Withdrawal
As soon as you get a good return on your deposit or you have to meet some other expenses, then you may tend to withdraw it immediately. But Wait! You can only end up getting a paltry sum if you do so. The reason is that you are going to lose interest for all those months for which interest wasn’t paid because of premature withdrawal.
If you’re looking for FD options that offer higher returns with fewer restrictions, you should have a look at prevailing PNB fixed deposit interest rates.
Also, it makes sense to avoid early withdrawal and wait till the maturity period when all interests are paid at once. Moreover, banks have the right to ask for a penalty because of premature withdrawal as this clause is already mentioned in their documentation.