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5 Reasons to Choose Company FDs over Bank FDs

FDs are a safe form of investment as they come with fixed interest rates until maturity. The two major institutions offering FDs are banks and companies. A company FD is an FD offered to you by financial and Non-Banking Financial Companies (NBFCs) while a bank FD is offered by banks. While bank FDs offer higher tax savings, the FD rates of interest offered by company FDs are much higher. This increases your ROI considerably. Read on to know more about the factors that make a company FD better than a bank FD.
Higher interest rates
Companies offer FDs in order to raise funds and thus give attractive interest rates to investors. FDs offered by companies also have credit ratings that indicate security and safety of your investment. For instance, the Bajaj Finance Fixed Deposit comes with CRISIL’s FAAA and ICRA’s MAAA ratings. These are the highest safety rating offered by both agencies.
The FD rate of interest offered by Bajaj Finance is also among the highest in India. You can enjoy up to 9.10% interest on an FD started for at least 36 months with interest payable at maturity. Additionally, you can use the Bajaj Finance FD Calculator to accurately gauge your returns at maturity and help make your financial planning more efficient.
Additionally, existing customers can get an additional 0.25% interest rate on the base interest rate across all tenors, while senior citizens get an additional 0.35% hike on interest rates. Moreover, you can receive an additional 0.25% interest basis FD renewals. Maintaining your FD with an issuer such as Bajaj Finance is lucrative because of the fact that it offers a high-interest rate, which helps you grow your savings while enjoying the power of compounding.
As an existing customer, if you were to invest Rs.1 lakh for a tenor of 36 months with interest payable at maturity, you’d enjoy the interest at a rate of 9% annually. This means at the end of your tenor, you will earn Rs.29,503 as interest and your total at maturity will be Rs.1,29,503.
One thing to keep in mind when choosing a company FD is to check the rating. Sometimes, to compensate for lower credit ratings, companies offer FDs with over-the-top interest rates. However, they may default on returns, which can be detrimental to your portfolio.
Easier to make premature withdrawals
Withdrawing a company FD prematurely is easier and quicker. This means you get better liquidity with a company FD, as you can withdraw funds easily by paying just a minimal fee. However, in most cases, you will have to wait 3 months after investing before you can apply for a premature withdrawal. The application for premature withdrawal is also straightforward and easy to follow. Most of the times, you can apply for it online and enjoy greater convenience.
You can avoid prematurely withdrawing FD and losing out on interest earnings by using it as collateral for a loan in order to access funds. Employing this measure gives you up to 90% of the investment amount as a loan. You can use this amount to address your urgent financial needs while your FD continues to earn interest.
For all these benefits, company FDs surpass bank FDs. An especially excellent company FD is the Fixed Deposit. This FD also has a low minimum investment amount of Rs.25,000 making it suitable for all investors. Apply online and invest today to earn significant returns on your hard-earned money.
Also, Read This: Company FD or Bank FD: Who Will You Trust Your Money With?