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How to Select the Best Fixed Deposit Scheme?

Published On Jun 21, 2021 12:15 PM By Sakshi Aggarwal

Fixed Deposit is an investment instrument offered by banks and NBFCs (non-banking financial companies) that help you grow your savings with utmost safety. One of the most preferred investment options, fixed deposits allow you to invest a lump sum amount with your financier and choose tenor according to your convenience. Once the pre-decided tenor is completed, you will start earning interest on the deposit, throughout the chosen duration, according to the rate of interest you decided on.  

How to Select The Best Fixed Deposit Scheme? 

Here are a few factors that you must consider when choosing the best fixed deposit scheme: 

1.Credibility of the Corporate or NBFC

When planning to opt for a fixed deposit plan offered by an NBFC, then you must check its credibility before submitting the form for it. This can be done by examining the safety ratings offered by a fixed deposit. 

2. Rate of Interest

On the basis of tenure, the banks offer interest rates. It may differ from one bank to another and depends on the age of the depositor. You must understand that bulk or lump sum deposits offer a higher rate of interest. Also, if you are a senior citizen, then you can enjoy a higher rate of interest by 0.5% than regular rates offered by most banks. 

3. Cumulative Vs Non-Cumulative

In a cumulative FD, you can reinvest the interest earned at a regular interval as in this case the compounding benefits and the accumulated interest is received at the time of maturity or end of the tenure. But in non-cumulative, the interest is earned at a regular interval which may either be on monthly or yearly basis. These are suitable for retired investors and pensioners who need more interest income to meet the expenses. 

4. Loan

One of the major benefits of fixed deposits is that the investors get a loan facility on them. At the time of financial emergency, you can avail of loans against fixed deposit for up to 90% of the deposited amount. The tenure of the loan can be up to the maximum tenure of fixed deposit.  

5. Premature Withdrawal

If the investor chooses to liquidate the fixed deposit before the end of the tenure, then they are required to pay a penalty, which may differ from one bank to another. Usually, the penalty is charged by lowering the interest rate applicable by 0.5%-1% by banks. However, there are some banks that let the investors break their Fds prematurely without the investors having to pay any penalty, but there are additional criteria to be met in that case. Therefore, as per the experts, when selecting a bank for fixed deposit, you must look for banks that impose low penalty in case of premature withdrawals. 


When choosing an investment plan in 2021, you must choose the right financier. You can do the same by considering a few factors mentioned above. Also, it is essential to ensure that the plan is aligned with your goals, so that you are able to achieve them faster. 

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard. 

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