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Short-term term deposits (FDs) offer several benefits.
Short-term FDs are a solid asset class that can help investors diversify their portfolios and minimize risk.
Short-term term deposits are financial instruments provided by banks and non-bank financial institutions. These FDs offer various benefits while encouraging customers to deposit money and avail high short-term FD interest rates. Typically, maturity periods of less than one year provide a unique opportunity for investors to store cash while earning returns and maintaining liquidity.
Short-Term FDs: See the Benefits
– Short-term FDs have several advantages, including flexibility and liquidity. Unlike long-term FDs, which park cash for several years, short-term FDs allow investors to withdraw funds relatively quickly. These liquidity features are ideal for people who need access to funds soon for a variety of reasons, including planned expenses, emergencies, or investment opportunities.
– Short-term FDs offer predictable and assured returns in addition to liquidity. The interest rates of these FDs are fixed at the time of investment, giving investors a clear picture of the returns. This predictability is especially useful for investors who want consistency in their investment portfolios during uncertain economic times or unpredictable market conditions.
– Short-term term deposits also have the advantage of being simple and easy to invest. Opening a short-term FD account requires little documentation, is a simple process, and is often available through online banking services. This convenience is attractive to both experienced investors and those new to financial investing.
– Tax efficiency is another area where short-term FDs can help, especially for investors in lower tax bands. Interest on short-term FDs is generally added to the investor's income and taxed accordingly. To reduce tax liability, investors can look into tax-saving FDs or avail annual tax exemptions and deductions.
Here are 24 banks offering the highest interest rates on 6-month to 1-year FDs.
- Bank of Baroda: 5.60% to 7.10%
- Indian Bank: 5.5% ~ 5.75%
- Bank of Maharashtra: 5.10% to 6%
- Canara Bank: 6.15% to 6.25%
- Reserve Bank of India: 6.0% to 6.25%
- Indian Bank: 3.85% to 7.05%
- Indian Overseas Bank: 5.75%
- Punjab and Sindh Bank: 5.25% to 7.10%
- Punjab National Bank: 6% to 7.05%
- State Bank of India: 5.75% to 6%
- UCO Bank: 5% to 5.50%
- Union Bank of India: 4.90% to 5.75%
- Axis Bank Limited: 5.75% to 6%
- Bandhan Bank Limited: 4.50%
- City Union Bank Limited: 6% to 6.5%
- Federal Bank Limited: 5% to 6%
- HDFC Bank Limited: 4.5% to 6%
- ICICI Bank Limited: 4.75% to 6%
- IDBI Bank Limited: 5.25% to 7.05%
- Induslind Bank Limited: 5% to 6.50%
- IDFC First Bank Limited: 4.5% to 5.75%
- Karnataka Bank Limited: 6.0% to 6.5%
- Kotak Mahindra Bank Limited: 6% to 7%
- Yes Bank Limited: 5% to 6.35%.
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