To control inflation, RBI is increasing the repo rate. The Reserve Bank of India (RBI) has increased the repo rate for the fifth time a few days ago. With the increase in the repo rate, where loans become costlier, the customers also get the benefit of increasing interest on FD.
As experts believe that in the coming time, RBI can increase the repo rate again. This means that the interest rates on FDs are also expected to increase in the future. In such a situation, those who have already got FD done, they will not be able to get the benefit of new interest rates of FD because in most banks the option of Fixed Rates FD is available. In normal FD, the interest rate remains the same till the time of maturity.
In the meanwhile interest rates increase or decrease, it does not matter. But looking at the present time, if you want to take advantage of the ever-increasing interest rates on FD, then you can opt for Floating Rates Fixed Deposit.
What is floating rates fixed deposit
In floating rates fixed deposits, the interest is not fixed, rather the interest rates keep on changing till maturity. Whenever the bank increases the interest on FD, you get the benefit of increased interest on FD and when the bank reduces the interest rate, you get less interest on your FD as well.
If you understand in simple words, the direct effect of increasing and decreasing the interest of the bank falls on the floating rate fixed deposit. But looking at the current circumstances, floating rates FD can be a better option for you.
Floating rates FD option in these banks
If you also want to take advantage of floating rates fixed deposits, then you can get this option in IDBI Bank and Yes Bank. In IDBI Bank, the interest is reset at an interval of every three months (1st April, 1st July, 1st October and 1st January). Apart from this, you can also get this FD done in Yes Bank. With Yes Bank, you can get an interest rate of 7.85% on FDs with a tenure of 18 months and above.
