A short-term fixed deposit is a financial tool offered by banks and non-bank financial institutions. These FDs provide a variety of advantages while also encouraging customers to deposit money and receive high short-term FD rates. They typically have a maturity period of less than a year and give a unique opportunity for investors to park their cash while earning returns and maintaining liquidity.
Short-Term FDs: Check The Benefits
– Short-term FDs have several advantages, including flexibility and liquidity. Unlike long-term FDs, which lock in cash for several years, short-term FDs allow investors to withdraw funds relatively rapidly. This liquidity feature makes them appropriate for those who may require access to their funds soon for a variety of reasons, including planned expenses, emergencies, or investment opportunities.
– In addition to liquidity, short-term FDs provide a predictable and certain rate of return. These FD’s interest rates are fixed at the moment of investment, giving investors a clear picture of their returns. This predictability is useful for investors looking for consistency in their investment portfolio, particularly during uncertain economic times or unpredictable market situations.
– Short-term fixed deposits also have the advantage of being simple and easy to invest in. Opening a short-term FD account is a simple process that requires little documentation and is frequently available through online banking services. This convenience makes it appealing to both experienced investors and those new to financial investments.
– Tax efficiency is another area where short-term FDs can help, particularly for investors in lower tax bands. Interest on short-term FDs is normally added to the investor’s income and taxed accordingly. To reduce their tax liability, investors can look into tax-saving FDs or take advantage of their annual tax exemptions and deductions.
Below are 24 banks that offer the highest interest rates on 6 months to 1-year FDs:
- Bank of Baroda: 5.60% to 7.10%
- Bank of India: 5.5% to 5.75%
- Bank of Maharashtra: 5.10% to 6%
- Canara Bank: 6.15% to 6.25%
- Central Bank of India: 6.0% to 6.25%
- Indian Bank: 3.85% to 7.05%
- Indian Overseas Bank: 5.75%
- Punjab and Sind 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%
- Induslnd 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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