How to benefit most from rising fixed deposit interest rates? Here are 4 hidden ways

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In February 2024, Axis Bank, HDFC Bank, IndusInd Bank, and Karnataka Bank have all made adjustments to their fixed deposit (FD) interest rates. This update holds significance for individuals contemplating the initiation of an FD, as the secured interest rate remains fixed throughout the deposit tenure. In contrast to investments linked to the market, FDs provide a predetermined return established at the account’s opening. This feature can be appealing to those seeking a reliable and foreseeable income source.

Achieving optimal returns on your FD investment involves more than merely selecting a bank. Consider the following crucial factors when investing a lump sum in an FD to ensure maximum returns on FD investments.

A thoughtful evaluation of the duration of your FD is essential before committing your lump sum. Putting your money into FDs entails a commitment for a set period. Opting for shorter tenures provides greater liquidity, enabling prompt access to your funds when necessary. On the other hand, longer tenures offer higher interest rates but restrict accessibility. Select a tenure that aligns with your financial objectives, ensuring you don’t tie up funds unexpectedly needed.

If flexibility is your priority, contemplate implementing a ladder strategy for your FD investments. Split your lump sum into segments and allocate it to FDs with varying maturities (short, medium, and long-term). This approach provides a blend of liquidity, consistent income, and the potential advantages of future rate adjustments.

Avoid accepting the initial rate you come across. Compare the interest rates provided by various banks, encompassing both private and public sector banks, nonbank financial companies (NBFCs), and smaller