How to Get the Maximum Benefit from Fixed Deposits (FD)
5 Ways to maximize returns from Fixed Deposits (FD)
Tips & Tricks on Fixed Deposits
1) Choose Tenure Wisely
When you are going to invest in Fixed Deposits it is important to choose the time period of FD which is around 1 year and close to the bank's maximum interest rate. Because the power of compounding is effective only when you invest for a longer period. It's not advisable to go for longer periods because banks keep on changing their FD rates regularly and you may get stuck with a lower FD rate in future, where you may decide to break the FD and go for better rate. If you do this you will lose on the compounding benefit on your deposit.
2) Go for senior citizen benefit on FD rates
Most banks give extra benefit (mostly 0.50%) to senior citizens on interest rates on fixed deposits. If you have a elderly at your home you can make a FD in their name and get higher interest rate.
3) Get Interest rate schedule from bank if you do not have a PAN Card.
To understand above clearly, if your interest income goes above Rs.10,000/- in a financial year, you have to pay TDS at rate of 10% with pan card and 20% without pan card. So, you should chose such an amount and interest rate which will give you an interest of less than or equal to ten thousand in a year or you will end up paying 20% TDS on your investment.
4) Submit 15G/15H in month of April.
If your income does not come under present tax slabs of income tax i.e Rs 2.50 lakhs (general public) and Rs 3.00 lakhs (senior citizens) then you should submit 15G (general public) or 15H (senior citizen) in the bank against your deposits. By doing this banks will not deduct any TDS (Tax Deducted at Source) from the interest you earn from fixed deposits.
5) Take a loan on Fixed Deposits in case of need.
Suppose you are in urgent need of money then don't break the FD and loose the cumulative effect on interest; instead tale a loan on it. All banks readily give a loan on their bank fixed deposits with attractive interest rates. The entire process takes 5 to 15 minutes approximately.
Nowadays you can make FD online and avail loan on that online sitting at home or office. The interest on loan varies from 1% to 2% over rate of FD and you can get 90% as loan on the balance of fixed deposits.