How Safe Is Your Money In Bank Fixed Deposit

Bank deposits have always been told to be safe haven, Yes it is to some extent if the amount invested is 5 Lakhs in one bank. Why is this logic? Earlier your fixed deposit guarantee only 1 Lakh on your fixed deposit or savings account. Now the insurance/guarantee has been raised up to 5L. 

Should you look for banks that pay higher interest rates.

Here risk attached to when you’re looking for banks that pay higher interest rates since these are small banks, they lure depositors with more interest to get their business going. If returns are a priority then go-ahead with these banks. Top priority should be to safeguard your deposits and expect decent returns should look for large banks where chances of a bank going bad are quite less.

Points to remember when making a bank deposit.

  1. Always look for a bank that pays out interest every quarter or half-yearly. This will have better returns in the long run. This reinvesting and compounding of money work like magic.
  2. Always look for safe, stable, and large banks where you get most of the service nearby which has a good branch network across the country.
  3. If you’re staying in metropolitan areas and tech-savvy should look for banks that provide most of the services online, this will help you save a lot of time and money. 
  4. Split the deposit amount into at least 2-3 banks, in case there are any issues, and withdrawal is an emergency. 
  5. Banks offer you zero balance saving bank account if you invest fixed deposits with them and offer other exemptions like multiple transactions without any fee and so on.

How do small banks or cooperative societies bank pay higher interest rates?

These banks tend to offer higher interest rates for deposits and lend it to a borrower at even higher rates when compared to other banks. Since most of them work under the supervision of RBI(Reserve Bank Of India) they have some breathing space to lend and borrow at high prices to run their business.