5 factors to be considered for Fixed Deposit scheme

1. Expanding Your Investment Portfolio: Choose the Best Fixed Deposit Scheme Based on These 5 Factors Depositing cash in a fixed deposit account also counts as a form of investment diversification. FD schemes form one of the most secure methods of saving your cash as you explore more profitable investment options. Before depositing with any bank, however, understand that such deposits attract varied interest rates depending on your bank. There is, therefore, a need to shop around comparing the attractiveness of the perks offered by these banks. But what do you look when choosing the best fixed- deposit scheme? 1.Interest rates and tenure The interest rate earned by your deposits should play a key role in influencing your choice of a fixed deposit scheme. Like in any other investment, you are advised to always go for fixed deposit offering the highest returns. You can estimate these returns using an FD Calculator based on the tenure of the scheme. In this case, long-term fixed plans offer higher annual interest rates compared to their short-term compatriots. You should, however, note that while the interest rate plays a crucial role in determining the fixed deposit scheme to consider, the favorable rates must be complemented by equally attractive policies. 2. Early termination cost What happens when you have an emergency and need to withdraw the funds already committed to a fixed deposit plan? The scheme service provider should be able to avail these funds in full or a portion of it as soon as possible. And while they have a right to charge you for breach of contractual terms, it shouldn’t sound like a punishment. For instance, the amount deducted from the interest as a result of premature withdrawal should be reasonable and agreed upon before depositing the funds. Most importantly, the service provider should not hold on the funds after receiving the withdrawal request for more than is necessary. Settle for a service provider that guarantees fast processing time, preferably hours or just a few days. 3. Convenience Did you know that you are not required to open a savings account with your fixed deposit taker? A service provider should help you understand this to avoid unnecessary charges and minimum balances that eat into the interest accumulated from fixed deposits. Most importantly, consider going for a service provider that offers online

2. banking services. These grant you the flexibility of converting your savings into fixed deposits after reaching the required minimum without visiting the bank. It also allows you to terminate the fixed deposit term from the comfort of your home. 4. The credibility of the fixed deposit scheme provider After checking the interest rates, the convenience of a service and the policies surrounding termination of the deposit contract, you now have to check the credibility of the deposit taker. How do other investors relate with your preferred banker’s services? If you hope to avoid disappointment during early termination or delayed interest payouts, settle for ‘A’ rated service providers. You can check their credibility from such legit online review sites as BBB. 5. Additional benefits You don’t have to terminate your fixed deposit term to settle emergencies and eventualities. Sound fixed deposit service providers understand this and have, therefore, introduced a raft of measures that help address such emergencies without ending the contract. While some offer short-term loans against the fixed deposit amount others extend overdraft services. Avoid bankers that are unwilling to extend loans or overdrafts against the fixed deposit. Bottom line Treat the fixed deposit scheme as an investment and conduct due diligence before settling on a service provider. In the process of vetting these service providers, avoid being lured in by the promise of higher interest rates at the expense of convenience and early termination costs. Most importantly, check the credibility of a banker as well as additional benefits advanced to fixed deposit investors like overdrafts.