There are several different criteria that you can use when you select a bank, and if you want one that allows fixed deposits, then you’ll have to factor that into your research as well. There is a tool called an FD calculator which can give you some insights into how good of a deal you’re getting with any bank’s fixed deposit offering, and it would be wise for you to use one if you are zeroing in on a likely candidate. Aside from that, here are three ways for you to tell whether the bank you’re considering is worth your time or if you want to take your business elsewhere.
The Rate of Interest Paid
Having a fixed deposit option available for its customers is part of the business model for many banks. One of the things you’ll want to determine, though, if you decide to go that route with your account, is what the rate of interest paid is going to be for your money. You should never choose a bank arbitrarily thinking that the interest rates for fixed deposit schemes are all the same. They aren’t. You might be surprised when you can get a substantially better deal at one bank over the others. Take some time to do the research before making a commitment. You don’t want to lose out on any of the dividends that could be yours.
The Credibility of the Bank
There are some banks that are national names, and others that are known primarily to a local market. Still other banks don’t have any brick-and-mortar locations and are accessible only through their websites. You will need to determine how trustworthy a bank is if you want to invest with them. Some people put faith in financial institutions that have the broadest reach, while for others it is the demeanor of their employees that makes the difference. For these investors, it is genial personal relationships with the bank representatives that lead them to think that is the best place for their money.
Just as critical as interest paid is compound interest paid. If you have structured a fixed deposit amount with a bank and you plan on reinvesting the interest that you earn, you will get a higher total return on your investment. You will need to speak to a bank representative to find out about their compound interest options and determine if they are to your satisfaction. Again, a comparison with other banks should be in order.
Investing with a bank through a fixed deposit setup can certainly be to your benefit if you have enough of an alternative cash flow to cover your regularly occurring expenses. If you do your due diligence and select the bank that seems to present the most viable option based not only on their rate of return but also on their reputation, then it should turn out to be a mutually beneficial relationship. Just be sure to monitor your finances over time to see if the fixed deposit scheme is performing the way that you expected it would.
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