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Top Fixed Deposit Strategies To Maximise Returns in 2025

Learn fixed deposit strategies to grow your savings and boost returns in 2025.

Beat inflation with AAA rated Bajaj Finance Fixed Deposits

In India, fixed deposits (FDs) are a popular investment option. Due to their risk-free nature and guaranteed returns, FDs are preferred by both new and experienced investors. However, to maximise returns, investors can follow several proven fixed deposit strategies, such as choosing the right tenure, re-investing interest, and comparing interest rates across banks to pick the best option.
 

Additionally, FDs are mostly seen as a safe investment. But, they still carry some risk, especially due to recent banking crises. Now, the government has increased the deposit insurance to Rs. 5 lakhs per person. To minimise risk, make sure the FD amount per family member does not exceed Rs. 5 lakhs. Also, use an “either or survivor" mode. In this way, you can easily liquidate the FD in case of an emergency and even get coverage for your deposit amount (including interest) up to Rs. 5 lakh.
 

Now, let’s have a look at some of the best fixed deposit strategies that you can implement to get more returns:

Key takeaways:

  • Corporate FDs offer higher interest rates than traditional bank FDs. However, they are comparatively risky and are not covered under deposit insurance.
  • Before investing, check the credit ratings of FDs. Prefer higher-rated FDs as they are more secure.

  • In a low interest rate environment, use the fixed deposit strategy of “laddering”. Instead of investing an entire amount at once, divide and invest in FDs with increasing tenures.

#1. Check out corporate FDs

Corporate FDs are provided by non-banking financial companies (NBFCs) and financial corporations that do not have a banking license in India. Recently, these FDs have gained popularity as they offer higher interest rates than traditional bank FDs, often by 2-5%.
 

Although a small interest rate increase might not seem significant, please note that it can lead to much larger returns over time. This effect is felt even more when the investment amount is high. Also, corporate FDs are an attractive option for investors who are looking to earn better-guaranteed returns while managing inflation.
 

However, be aware that these FDs also come with a slightly “higher risk” compared to bank FDs as they are not covered under DICGC. This implies your deposit amount up to Rs. 5 lakhs is not insured in corporate FDs.

#2. Assess credit ratings before investing

Before investing in any fixed deposit, you must check the “credit ratings” assigned by agencies like CRISIL or ICRA. For the unaware, these ratings indicate the financial stability of the institution issuing the FD. A higher rating (usually AAA or AA) means a safer investment. However, such highly-rated FDs offer slightly lower returns. In comparison, lower-rated FDs offer higher returns but come with increased risk.

#3. Opt for the cumulative option

Cumulative FDs use the power of “compounding” and increase your returns over time. Under this option, you do not receive periodic interest payouts. Instead, the interest is reinvested and paid out at the end of the term, along with the principal. This allows both your principal and the accumulated interest to “earn further interest”, which maximises your overall earnings.
 

If you are looking for long-term wealth building, opt for cumulative FDs and earn significantly more at maturity.

Grow your money with FD

#4. Don’t make pre-mature withdrawals; take a loan instead

Most people make FDs for financial emergencies. During such times, they break their FDs before the end of their tenure. But, doing so reduces their overall earnings due to penalties and lost interest. If you are facing a similar situation, consider using your “FD as collateral” for a loan through an overdraft facility.
 

In this fixed deposit strategy, you borrow against your FD while still earning interest on it. Please note that you only pay interest on the amount borrowed, and for the days it is used. Many financial institutions offer up to 90% of the FD amount as an overdraft.

#5. Follow the laddering strategy

Laddering is a popular fixed deposit strategy that works best in a low-interest rate environment. It allows you to earn maximum returns from your FDs and, at the same time, maintains enough liquidity. In this technique, instead of locking all your money in one long-term FD at a low interest rate, you divide the amount into smaller FDs with “increasing tenures”.
 

For example,

  • Say you have Rs. 5,00,000.

  • Now, instead of putting it all in a 5-year FD, you invest in five separate FDs of Rs. 1,00,000 each with tenures of 1, 2, 3, 4, and 5 years.

  • This way, your one FD matures annually.

  • Now, you can reinvest the matured FD at the current and possibly higher interest rate.
     

By reinvesting the matured FD at a higher interest rate, you maximise returns and eliminate the risk of locking all funds in a “low-rate environment”. Also, since FDs mature every year, you get enough liquidity for your needs.

If you are looking for safe investment option, then you can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.95% p.a.

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Frequently asked questions 

Is a bank FD risky?

Generally, a bank FD is considered a low-risk investment. It offers guaranteed returns and deposit insurance coverage up to Rs. 5 lakhs. However, it is not completely risk-free, and there is always a chance of losing the deposit amount if the bank becomes insolvent.

Can I take a loan against my FD?

Yes, many institutions allow loans or overdrafts against FDs. You can borrow up to 90% of the FD amount while still earning interest on your deposit.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.

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