How to Choose the Best Effective Fixed Deposit Scheme?

Fixed deposits (FDs) are one of the simplest forms of investment. They are a safe choice, you get guaranteed returns, and the product is easy to understand and operate. All these aspects make FDs popular amongst investors. However, owing to their simplicity you may not spend enough time or effort choosing the most effective FD scheme.

When you choose a deposit scheme, you tend to look for the best FD rates; this is an important aspect, but you need to focus on other factors.

Below we discuss other aspects that help you choose a suitable fixed deposit.


1. The Credibility Of The Financial Institution

Even though FDs are not a risky investment option and are secured up to Rs 500,000 by the DICGC, you cannot ignore this aspect. Open an FD with a bank or a Non-banking financial company(NBFC) with stable and strong financials. You do not want your money stuck in a financial institution that goes bust overnight, and you have to wait for months or years to get your money back.

Ratings of credit rating agencies like CRISIL, CARE or ICRA can help you decide. A fixed deposit scheme is a good option, owing to the long and stable history of PNB Housing Finance Limited.

 2. Interest Rates

Interes rates vary with the tenure and also depend on the bank policies. It is possible that, for the same duration, two banks may offer different interest rates. While you should look for the best FD rates, you cannot ignore the bank’s reputation and your requirements.

Do not opt for the longer duration if the highest rate is available for 10 years, but you know you will need money in the next five years.

However, sometimes, keeping your money for a few additional days can earn you higher interest. In such a situation, if you have the flexibility, hold your money with the bank for the extra days and earn more.
Senior citizens get a higher rate, which also varies from one institution to another. Keep this aspect in mind when choosing where to start the deposit. Research well to find out the best FD rates beforehand.

3. Traditional Or Cumulative Deposit

Traditional deposits pay you interest at intervals of your choice. You can get monthly, quarterly or annual payouts. Cumulative deposits keep accumulating the interest; you get the principal and the interest on maturity. The yield of cumulative deposits is higher as you earn interest on interest.

For a Fixed deposit scheme to be effective, it should match your requirements. If you want to save for a specific goal, cumulative deposits are more suitable.

Traditional deposits are the right option if you are looking for additional income or are retired and want some regular inflows.

4. Premature Withdrawal Option

Most banks allow you to withdraw the deposit before the term is over. This gives you liquidity; you can access funds with ease in times of need. However, the banks charge a penalty as you are paid a lower interest corresponding to the period you keep the funds.

When you start a deposit, be mindful of your future requirements and choose a term carefully. Find out about the conditions of the bank regarding premature withdrawal and then make an informed decision.

5. Application Process and Documentation

Find out about the application process and the documents required to open a deposit. You can check the requirements and the process on the website or by visiting a nearby branch. Opt for a bank with a user-friendly and simple application process with minimal documentation.

An Overview Of The PNB FD Scheme

PNB Housing Finance is a three-decade-old financial institution; it is also the 2nd largest HFC in deposit size. They offer a secure and convenient option for customers to deposit their money. Some of the features of the PNB Fixed deposit Scheme are listed below:

  • High Safety Assurance with CRISIL Rating of FAA+/Negative You can avail of loans up to 75% of the deposit value.
  • Nomination facility is available.
  • Premature cancellation is allowed after three months.
  • A large network of branches makes it convenient to start a deposit and access your funds.


All banks and NBFCs offer fixed deposits. A little effort and research can help you choose the most effective Fixed deposit scheme, which helps your money grow and helps you fulfil your financial goals.

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