their new rates are 6.25% above 10L deposits.
fd highest rate is 6.5% for five years.
so from my understanding... bank interest would come every quarter so it adds up the principal amount every three months.
fd interest if you go for compounding would add interest every year? so savings might fetch you slightly better interest rate?
update: i might be wrong here. even on fds, banks probably pay interest quarterly which would get added to principal account imo. this might depend upon the bank's policy.
update 2: looks like most banks stick to quarterly interest. though rbi has allowed them to go for even lower time periods.
the thing these bankers don't highlight is that. with a 5 year fd, the interest rate won't change. but for savings, your interest would go down every quarter based on what's been happening over the last couple of years.
look at
idfc for instance. their fd interest was 6 and bank interest was 7 just few months ago. but their savings interest is down to 4% now within six months. i haven't checked yet but it might be even below 4% from today lol.
so if one can lock away the money in a fd for five years, i would go for the fd in this case.
i would also recommend opening a ppf account for spare cash. crypto, stock etc would probably provide better returns. but if you are like me and want to keep things simple... PPF is a great way to create long term savings. i tend to deposit my fd interest in ppf instead of compounding it in the principal amount.
