Fixed Deposits can be fruitful for people who look for long term investments as it comes with low risk and enables them to diversify the individual’s portfolio. However, people often get confused while choosing a bank to open an FD account and there are certain points that need to be kept in mind while choosing one.
The bank’s interest rate offerings can be the driving factor behind such investments. One needs to be hawkish in deciding which banks are offering the best interest rate at that point in time.
As per the data by BankBazaar, new and small banks are providing higher interest rates against the established players.
Picture this, the data revealed that small finance banks like AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank were providing interest rates up to 7%. Besides that the DCB bank offered up to 6.75% interest rate, followed by RBL Bank (6.25%) and Bandhan Bank (6%).
If you compare these interest rates with established players like HDFC Bank, ICICI Bank and Axis Bank, the latter offer interest rates in the range of 3 to 3.5 %. Kotak Mahindra Bank offers an interest rate up to 4%, the State Bank of India (SBI) gives 2.70 % and Bank of Baroda gives up to 3.20 % percent interest.
But there is a catch. These new and smaller banks ask people to keep the minimum balance high which doesn’t happen when it comes to bigger and established banks.