With both private and public sector banks likely to lower their deposit rates in the coming weeks, financial experts are urging investors to act swiftly and lock in higher FD returns while they still can.
A Limited Window to Earn Up to 7.25% on FDs
Currently, many banks are offering FD interest rates ranging between 6.5% and 7.25%, particularly on long-term deposits of up to 5 years. According to experts, these rates won’t last long as banks begin adjusting to the RBI’s dovish policy shift.
“This could be your last chance to invest in fixed deposits at high interest rates,” a senior banker advised. “If your FD is nearing maturity, consider reinvesting immediately before rates drop further.”
Use the Bucketing Strategy to Beat Interest Rate Volatility
To maximize returns while managing future rate fluctuations, experts recommend using a “bucketing strategy”. Instead of investing your full amount in a single FD, split the sum across multiple tenures.
For example, if you have ₹1 lakh to invest:
-
Put ₹33,000 in a 1-year FD
-
₹33,000 in a 2-year FD
-
₹34,000 in a 3-year FD
This approach allows part of your investment to mature earlier, giving you the flexibility to reinvest at potentially higher rates if the interest environment improves later. It also ensures that you are not fully locked into lower rates if the trend reverses.
Senior Citizens Can Earn Even More
Banks typically offer an additional 0.50% or more interest to senior citizens on fixed deposits. If you’re investing on behalf of elderly parents, consider booking FDs in their name to take advantage of this benefit. However, remember to add your name as a nominee to avoid complications in case of any unforeseen event.
Many people overlook the nomination step, which can delay fund access if the senior account holder passes away. Ensuring proper documentation now can save significant trouble later.
Avoid Auto-Renewal and Compare Bank Offers
One common pitfall to avoid is choosing the auto-renewal option while booking an FD. When your FD matures, banks automatically renew it—often without informing you of better rates elsewhere.
By manually reviewing your FD options at maturity, you can compare rates from various banks and make a better decision based on market conditions.
Why This RBI Decision Matters
The 50 bps repo rate cut suggests that the RBI is taking an aggressive stance to support economic activity, but it also signals a long-term low interest rate environment for depositors. Experts believe this rate trend could persist for the next 1–2 years, making it all the more crucial for savers to take action now.
FD investors who wait may find themselves stuck with lower yields in the months ahead, especially as banks begin revising their deposit rate slabs downward.
Final Advice
If you’ve been waiting to invest in a fixed deposit or your current FD is nearing maturity, don’t delay. Book your FD now to lock in high interest rates, consider spreading your investment using the bucketing strategy, and leverage senior citizen benefits where applicable. With rate cuts already underway, this could be your last chance to earn up to 7.25% on your savings.
Author Profile
- My name is Kuldeep Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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