What are the Ways to Increase a Deposit Interest?
Last Updated : Sept. 30, 2020, 7:37 p.m.
Everyone wants to keep his/her hard-earned money safe and earn interest on the same. Fixed Deposits (FDs) are one of the most popular banking deposits with which customers can earn higher interest on their money. An individual only needs to deposit his/her money for a fixed period. Banks, Non-Banking Finance Companies (NBFCs), and Small Finance Banks will provide interest on the same. But people often ask this question – How can I increase the Deposit Interest so that I can get a higher amount after maturity?
Well, this question is pretty valid as anyone would like to earn a higher interest on the deposited money. But this is not as simple as it sounds. FD Interest rates tend to vary from one lender to another and currently range from 3.50 – 6% per annum. There are a few important points that an individual needs to keep in mind if he or she wants to increase the deposit interest. So what are the methods that help increase a deposit interest? We will be discussing all such methods in this article. So, keep reading!
How to Increase Interest on Your Deposited Money?
As we said, there are a few methods to increase the interest in your deposited amount. These are choosing a Lender with higher FD Rates, opting for the Suitable Tenure, Depositing a Higher Amount, and opening an FD in your parents name. We are showing details about each of them. Please have a look.
Choose a Lender with Higher FD Rates
One of the best methods to get higher interest on your FD is to choose a lender that can provide the same. Thus, it becomes important to compare all the options before depositing the money. As we said earlier also, FD interest rates tend to vary from one lender to another and depend on several factors such as Tenure, Deposit amount, type of scheme, the frequency at which you are earning the interest, etc. We are showing some of the top lenders that provide higher FD interest rates . This helps you choose the suitable lender with higher FD rates.
| Lender | FD Interest Rates (in per annum) |
|---|---|
| State Bank of India (SBI) | 2.90% - 6.20% |
| IndusInd Bank | 2.50% - 6.00% |
| HDFC Bank | 2.50% - 6.25% |
| RBL Bank | 3.25% - 7.45% |
| DCB Bank | 4.75% - 7.45% |
| PNB Housing Finance Ltd. | 6.20% - 7.20% |
| YES BANK | 3.25% - 7.25% |
| Utkarsh Small Finance Bank | 3.25% - 8.00% |
| Equitas Small Finance Bank | 3.60% - 7.95% |
| Ujjivan Small Finance Bank | 3.05% - 7% |
Choose the Suitable Tenure
Coming to the second method to increase the interest earnings on fixed deposits, we would like to bring your focus to the point we mentioned in the last method – How FD Rates depend on the Tenure! Yes, one of the methods to earn higher interest rates on your deposits is by choosing the tenure wisely. Usually, you can open a Fixed Deposit for as short as 7 days and as long as 10 years. But when you look to increase your deposit interest, choosing the right tenure becomes crucial. Also, the suitable tenure for a regular citizen and a senior citizen can be different from each other.
For example, RBL Bank FD Interest Rates range from 3.25% - 7.45% per annum over a tenure of 7 days to 240 months. But if you are a Regular Citizen and want to earn an interest of 7% per annum or above, the suitable tenure would be 36 months to 36 months 1 day. While for Senior Citizens, an ideal tenure would be anywhere between 12 months to 240 months as the FD Interest rates for this tenure will range from 7.00 – 7.65% per annum.
We are showing all those lenders that provide higher FD interest rates in the below table. It will also mention the suitable tenure for which you can get higher rates. Please check it out!
| Lenders | Interest Rate (In Per Annum) | Minimum Deposit Tenure Needed to earn Higher FD Rates |
|---|---|---|
| SBI | 5.40% (Regular Citizens) 5.80% - 6.20% (Senior Citizens) | 5 years - upto 10 years (Regular Citizens) 3 years - upto 10 years(Senior Citizens) |
| IndusInd Bank | 7.00% (Regular Citizens) 7.15%-7.50% (Senior Citizens) | 1 year - Below 3 years (Regular Citizens) 1 year - 61 months and above (Senior Citizens) |
| HDFC Bank | 5.50% (Regular Citizens) 5.80% - 6.25% (Senior Citizens) | 5 years 1 day - 10 years (Regular Citizens) 3 years 1 day - 10 years (Senior Citizens) |
| RBL Bank | 7.15% (Regular Citizens) 7.00%-7.65% (Senior Citizens) | 36 months - 36 months and 1 day (Regular Citizens) 12 months - 240 months (Senior Citizens) |
| DCB Bank | 7.00%-7.45% (Senior Citizens) | 12 months - 120 months (Senior Citizens) |
| PNB Housing Finance Ltd. | 7.10%-7.20% (Senior Citizens) | 36 months - 120 months (Senior Citizens) |
| YES BANK | 7.00% (Regular Citizens) 7.00%-7.25% (Senior Citizens) | 1-3 Years (Regular Citizens) 6 Months-10 Years (Senior Citizens) |
| Utkarsh Small Finance Bank | 7.25%-7.50% (Regular Citizens) 7.00%-8.00% (Senior Citizens) | 365 days - 3652 days (Regular Citizens) 181 days - 3652 days (Senior Citizens) |
| Equitas Small Finance Bank | 7.10%-7.35% (Regular Citizens) 7.20%-7.95% (Senior Citizens) | 1-3 Years (Regular Citizens) 1-10 Years (Senior Citizens) |
| Ujjivan Small Finance Bank | 7.00% (Senior Citizens) | 1 year - 2 years (Senior Citizens) |
Deposit a Higher Amount
A higher deposit amount will automatically help increase the interest on it. If you keep this in mind, you will always be able to earn a higher interest amount on your deposit. When you deposit a smaller amount, the maturity amount will be lower as compared when you deposit a higher amount irrespective of the same FD interest rates. Let’s understand this through an example.
Let’s say an individual wants to open an RBL Bank Fixed Deposit. From the above table, we can see that a Regular Citizen can earn 7.15% per annum on the deposit if he/she chooses a tenure between 36 months to 36 months 1 day. So, we are taking two different deposit amounts of INR 3 lakh and INR 6 lakh so that you can see the difference.
On depositing INR 3 lakh for 3 years at an interest rate of 7.15% per annum, the total interest amount will be INR 71,069. Hence, the maturity value will be INR 3,71,069.
While depositing INR 6 lakh for the same tenure and interest rate, the total interest will be INR 1,42,138 which will make the maturity value as INR 7,42,138.
So, it is clear as daylight that when you are choosing a higher deposit amount (INR 6 lakh), you are getting a double interest amount as compared to a situation when you deposit an amount of INR 3 lakh. This is why depositing a higher amount is one of the efficient methods to increase your deposit interest amount.
Open a Fixed Deposit in your Parents Name
Every lender provides an additional interest on deposits of Senior Citizen deposits. So, if your parents are Senior Citizens (the age must be 60 or above at the time of opening an FD), you can earn a higher FD interest rate. Lenders usually provide between 0.25% to 0.75% higher than the interest given to Regular Citizens. The additional interest rates are available for the Senior Citizens. The tenure for a Senior Citizen FD remains the same as 7 days to 10 years in most of the banks.
