Fixed deposit (FD) rates are currently looking pretty attractive. If you’ve been thinking about parking your savings in guaranteed return investment schemes and earn decent returns, this might be the best time to do so. Banks are currently offering interest rates as high as 8% on FDs, with smaller banks pushing the envelope even further. With high rates being offered, it’s worth considering locking in your money before banks announce changes in rates.
Banks are in a bit of a sweet spot at the moment. Thanks to the Reserve Bank of India’s (RBI) efforts to improve liquidity in the banking system, there’s more cash flowing around. In the last one year, banks struggled with falling deposits and were offering competitive interest rates to lure depositors. For investors, this is good news. You can earn more on your savings without taking on the risks that come with other investments.
However, with the RBI reducing the repo rate by 25 bps in the recent MPC meet, some banks may consider reducing their deposits rates, which could impact new depositors. Therefore, if you want to lock in the current rates, now might be the best time to choose the most suitable fixed deposits.
Also Read: SIP vs Government Schemes: Where should you invest for a stress-free retirement?
Here are some reasons why you should consider locking your money in FDs!
Budget 2025 Gives FDs a Boost
The recent Union Budget 2025 has made fixed deposits even more appealing by raising the TDS threshold and doubling it for senior citizens. This is the best time to earn higher returns on your investments.
Adhil Shetty, CEO of Bankbazaar.com, says, “The government has raised the threshold for Tax Deducted at Source (TDS) on FDs. For non-senior citizens, the TDS limit has been increased from Rs 40,000 to Rs 50,000. For senior citizens, the limit has gone up significantly from Rs 50,000 to Rs 1 lakh. This means fewer people will have to worry about TDS deductions on their FD interest, making FDs a more attractive option for both regular earners and retirees.”
Act Now Before Rates Drop
While the current FD rates are tempting, they might not stay this high for long. As more people rush to take advantage of these rates,
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