The Reserve Bank of India (RBI) has announced a big cut of 50 basis points in the repo rate on June 6, 2025. This cut is twice as much as expected, as economists had estimated a reduction of only 25 basis points i.e. 0.25%. This unexpected cut in the repo rate will have a direct impact on the deposit interest rates of banks.
Private and government banks will now start reducing interest rates on their fixed deposits (FD). If you are thinking of keeping money in a fixed deposit, then this may be your last chance! Before the interest rates fall, you should book your FD at high interest rates, so that you can avoid future losses.
Golden opportunity to earn up to 7.25% interest on FD
At present, many private and government banks are offering interest ranging from 6.5% to 7.25% on long-term (5-year) fixed deposits. Experts believe that these rates will not be available in the future. A banker said, “If you want to invest in FD or your FD is about to mature, then this is your last opportunity to book FD at high interest rates.” Experts advise that it is important to take special care of some things while booking FD so that you can get maximum benefit.
Pay special attention to these things while booking FD
If your bank is offering 7 percent or more interest on 3-5-year deposits, then you must invest some money in FD at this rate. Experts say that it is expected that RBI will continue to reduce interest rates. This means that interest rates on deposits will remain low for the next 1-2 years.
Therefore, instead of keeping all the money in a single FD, it would be better to keep it in FDs with different maturity periods. For example, suppose you have to get an FD of ₹ 1 lakh. Then you can get three FDs of ₹ 33-33 thousand, whose maturity period can be one year, 2 years, and 3 years. The advantage of this is that if the rates rise again after 1 or 2 years, then after maturity you can invest the FD money in a new FD at a higher interest rate. This is called the Bucketing Strategy, which protects you from fluctuations in rates.
Book FD in the name of senior citizens
Banks give higher interest on FDs to senior citizens. If you book an FD in the name of your elderly parents, you can get 0.50 percent or more interest. This will also provide an additional financial security for them.
You just have to keep in mind that while booking an FD in the name of parents, you must give your name as a nominee. Many people get FD done in the name of their parents, but forget to give their name to the nominee. In such a situation, there is a problem in withdrawing money in case of the death of a mother or father. To avoid such a situation, it is mandatory to give your name to the nominee.
Do not choose the option of auto-renewal
While getting an FD, you should not choose the option of auto-renewal. By doing this, when the FD matures, the bank automatically renews your FD. In such a situation, you do not have the opportunity to see if you can get more interest by opening an FD in another bank.