A fixed deposit plan helps an investor to grow his investment at a higher interest rate and at the same time it offers the security of the capital amount as well. Both banks and finance firms provide different FD plans to suit the requirements of different customers.
Though both bank and corporate fixed deposits are similar when it comes to the fixed lock-in period, one-time investment of capital, and fixed FD rate, there are many differences as well. Let us try to understand which one of them is better especially in the present scenario:
You can visit the official portal of the bank or finance company with which you intend to open an FD plan to understand the investment process clearly.
Though most banks and finance companies have started providing FD forms on their portal, you might not be able to verify your documents online. Bajaj Finance has laid down an end-to-end online process where you can also complete the KYC process online using their cKYC procedure. Not only that, they offer an additional 0.10% interest rate if you utilize the online FD form to start an FD.
Premature withdrawals are not allowed by some banks whereas some banks and finance companies might allow you to withdraw your money after completion of the minimum deposit period.
However, it will cost you a penalty of around 2% of your interest earnings that is not ideal for the growth of your investment. NBFCs like Bajaj Finance offer loans against FD that can help you to fund your emergency requirements without breaking your deposits.
Rate of interest
The interest rate is the most crucial thing as it determines the returns you would receive post maturity. The bank FD interest rates have gone down considerably in the last quarter or so due to the unstable economic condition. On average, you will get an FD rate around 5% at the maximum and if you are a senior citizen you might get a slightly better FD interest rate.
However, some corporate FD schemes are still offering a decent interest rate even today. Bajaj Finance FD scheme seems to be at the forefront as it is offering an FD rate as high as 6.85%.
Let us see how a higher interest rate translates into real money when you invest Rs. 5,00,000 in a 5-year corporate FD as compared to the same deposit amount and tenor when locked in a bank FD.
You can see that this difference in the FD rate creates a huge difference in your returns. Also, senior citizens get a 0.25% additional FD rate when they invest in this FD scheme. For performing the FD rates comparison based on different tenors and FD types, you can utilize an online FD calculator.
It is also safe to invest in Bajaj Finance FD scheme as it has been credited highly for its safety and stability by credit rating organizations like ICRA and CRISIL. The option of investing in multiple FDs using the multi-deposit facility gives you a chance of laddering your deposits in such a way that you receive many liquidity points in a year.
Therefore, you can think of investing in such corporate FDs to grow your deposits without any hurdles.
Fixed deposits offer us a safe way of growing your investments. Banks and finance companies provide different FD plans but there always has been a debate between the investors as to which one among them is better. Bank fixed deposit plans are stable but the interest rate is not as lucrative as before due to the ongoing economic situation. Usually, corporate FD plans offer higher interest rates. For instance, Bajaj Finance FD provides a higher interest rate of up to 6.85%. It is the highest paying fixed deposit in India. Not only that, this FD scheme is safe and allows you to park your savings in multiple FDs at once using its multi-deposit facility. It has been highly rated by CRISIL and ICRA.