Right now Fixed deposits (FDs) are a popular investment option in India, but investors often wonder whether short-term FDs can give great returns, or are long-term investments the only profitable deal? Long-term fixed deposits definitely provide more stability and perks, but short-term fixed deposits (ranging from 7 days to 1 year) can be perfect for specific financial situations. So, when should you consider a short-term FD and why? Here are some key points to help you make an informed choice.
When should you put your money into a short-term FD?
Extra Cash on Hand
If you’ve got some extra cash that you’ll need soon, it might be wise to lock it into a short-term FD. This way, your savings stay secure, and you earn better returns compared to a regular savings account.
Emergency Fund
Keeping a portion of your emergency fund in a short-term FD not only protects your money but also earns you interest. Plus, it’s accessible when you need it.
Saving for Short-Term Goals
If you’re putting money aside for something like a vacation, wedding, or a new gadget, short-term FDs (up to 1 year) provide guaranteed returns, helping you reach your goals without stress.
Waiting for a Better Investment Opportunity
If you’re holding out for more favorable market conditions, you can park your cash in short-term FDs instead of letting it sit idle.
Uncertain Interest Rate Changes
If interest rates are expected to rise, locking your money in a long-term FD might not be the best move. Short-term FDs allow you to reinvest later at potentially better rates.
Things to Consider When Investing in Short-Term FDs
Interest Rates
Make sure to compare the FD rates from various banks and non-banking financial companies. Private banks and small finance banks often provide higher returns.
Premature Withdrawal Policies
Be aware that there might be penalties for withdrawing from short-term FDs before the term ends.
Tax Information
The interest you earn is subject to tax as ‘Income from other sources’ and could also be subject to TDS if it goes beyond the specified limit.
Withdrawal Guidelines
Ensure that your funds are in a place where you can access them easily when you need them.
These banks are offering attractive returns on FDs for terms ranging from 6 months to 1 year. Short-term FDs are a reliable way to manage your cash flow while earning decent returns. Just be aware of the returns you can expect and your tax obligations in the short term. FDs can be a solid choice for achieving short-term financial goals.
If you’re looking for better returns on FDs for 6 months to 1 year, check out the FD rates from over 30 banks listed below.
Bank Name Interest Rate on FD (6 months to 1 year)
State Bank Of India 6.25%-6.50%
UCO Bank 5%-7.30%
Union Bank Of India 5%-6.35%
Axis Bank Ltd. 5.75%-6%
Bandhan Bank Ltd. 4.50%
Catholic Syrian Bank Ltd. 4.25%-7.25%
City Union Bank Ltd. 6%-7.5%
DCB Bank Ltd. 6.2%-7.25%
Dhanlaxmi Bank Ltd. 6%-7.25%
Federal Bank Ltd. 5.50%-6.50%
HDFC Bank Ltd 4.5%-6%
ICICI Bank Ltd. 4.75%-6%
IDBI Bank Limited 5.50%-7.05%
IndusInd Bank Ltd 5%-6.50%
IDFC First Bank Ltd. 4.5%-5.75%
Jammu & Kashmir Bank Ltd. 5.5%-7%
Karnataka Bank Ltd 6.25%
Karur Vysya Bank Ltd. 6%-7.4%
Kotak Mahindra Bank Ltd 6%-7%
Nainital Bank Ltd. 4.95%-7%
RBL Bank Ltd 4.75%-6.05%
South Indian Bank Ltd. 4.5%-6.55%
Tamilnad Mercantile Bank Ltd. 6.50%-7.60%
Yes Bank Ltd. 5%-6.50%
Bank Of Baroda 5.60%-6.50%
Bank of India 6.00%
Maharashtra Bank 5.25%-6.90%
Desclaimer: For any financial invest anywhere on your own responsibility, Times Bull will not be responsible for it.
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