FD Interest Rates Revised; All You Need To Know

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New Delhi: In a recent development, two prominent private banks in the country have revised their Fixed Deposit (FD) interest rates, signaling favorable news for investors. ICICI Bank announced new rates effective from July 2, 2024.

The new rates offered by ICICI Bank now range between 3% and 7.2%. For senior citizens, the bank is offering interest rates from 3.5% to 7.75%. Notably, ICICI Bank offers the highest interest rate of 7.2% on regular FDs ranging from 15 months to 2 years. For a one-year FD, the interest rate stands at 6.7%.

Similarly, Axis Bank’s FD rates also fall within the range of 3% to 7.2%. For senior citizens, the rates vary between 3.5% and 7.75%. Some banks are offering even better rates.

The State Bank of India (SBI), the country’s largest public sector bank, offers FD interest rates ranging from 3.5% to 7% for regular customers and from 4% to 7.5% for senior citizens. SBI offers the highest interest rate of 7.5% on FDs ranging from 2 to 3 years and 6.5% for a 5-year FD.

This development implies that banks are offering higher interest rates for shorter duration FDs. Whereas, rates are comparatively lower for longer duration deposits. Other banks are also adopting similar strategies.

Long-term FD rates nearing peak

In the current scenario, the rates for long-term FDs are near their peak and there is little indication of significant increases in these rates. However, indications from the Reserve Bank of India (RBI) suggest that there may be a phase of policy rate cuts starting next year. In such a situation, investing in FDs now can help in benefiting from higher interest rates.

Any investment decision should align with one’s future needs. Currently, shorter-term FDs are offering higher interest rates, making it feasible to split investments. For instance, investing 60% of the total amount in 2 to 3-year FDs and the remaining in longer-term deposits can be a strategic move.

Financial experts suggest that current FD interest rates are almost at their peak, with little possibility of significant increases. Therefore, it is prudent to make informed investment decisions to maximize returns. Considering the penalties and lower interest rates on premature withdrawals, careful planning is essential.

Fixed Deposits remain a secure option for investment, providing assured returns. By investing wisely and understanding the prevailing rates, investors can secure better returns on their investments.