Tuesday 11 August 2015

Lookout for the best bank deposits


With the bank’s revising their interest rates offered on fixed deposits, it has become hard to work out which banks are offering the best interest rates on fixed deposits.
The banks began cutting down the interest rates on fixed deposits towards the end of 2014 as the Reserve Bank of India cut rates by 75 basis points. Across one to five years, most banks lowered their interest rates by 50 to 75 basis points. Few banks like Canara bank, Punjab National Bank, Indian Overseas Bank, United Bank of India, Vijaya Bank and Oriental Bank of Commerce have made deeper cuts. Canara Bank reduced the interest rate on deposits of one to five years from 9 percent to 8 percent in the past four months. Since the interest rates are on a downward cycle, further rate cuts are expected. Lakshmi Vilas Bank fixed deposits and Karur Vysya Bank fixed deposits are offering the best rates.


Longer term deposits’ options
Investing in a longer term deposit makes sense at this stage as shorter term deposits will offer you less interest on the money you will invest. In case you have no immediate need, then consider investing in deposits from three years to less than five years. For the three to less than five year term, Lakshmi Vilas Bank fixed deposits and DCB Bank fixed deposits are currently offering the highest interest rate at 8.6 percent. It also offers fixed deposits for a minimum opening balance of Rs.100. the interest is compounded on a quarterly basis for the cumulative deposits made. The interest pay-out option is also made available. DCB has a minimum deposit of Rs.10,000 and if you are choosing the cumulative option, then the interest will be compounded. DCB deposits can be opened online.
Karur Vysya Bank on the other hand offer slightly lower rates on their fixed deposits. The bank offers 8.5 percent for the three year time frame deposits. Currently, it is hard to predict how the interest cycle will unfold and it is not wise to opt for fixed deposits for tenures of five years and above. It is also advisable to go for a cumulative option if you require a regular monthly cash flow.
Shorter term deposits
It is ideal to invest for at least three years. Lakshmi Vilas Bank will pay 8.6 percent interest for deposits of one year and above. DCB offers 8.55 percent interest for deposits between 12 and 24 months. Karur Vysya Bank, Andhra Bank and TMB will offer you 8.5 percent interest on one to two year deposits.
Then there are also the special deposits schemes that will offer higher rates. TMB’s has 555-day deposit that gives 8.6 percent interest and State Bank of Patiala offers 8.52 percent interest on one to 555 days deposits.