Factors Affecting Fixed Deposit Interest Rates

Factors Affecting Fixed Deposit Interest Rates

Before you decide to foreclose your home loan, consider the tax benefits you get on repayment of interest and principal amount every year. Photo: iStock

Uncertain economic conditions and turbulence in the finance sector are the culprits refraining investors from investing their money in the equity market. Naturally, investors are in search of more secured investment sector which has in store assured income and do not tag along market risks. This has resulted in a visible increase in the number of Fixed Deposit, and a lion share of investors are pushing their money in fixed deposits to avail n number of benefits that this investment sector showcases.

Factors affecting fixed deposit interest rates


Talking about fixed deposit interest rate, it varies proportionally with the tenor that the investor chooses at the time of initializing the investment. Based on the lenders the interest rates on Fixed Deposit vary for different duration. Generally, there is around 0.25 percent higher interest rate on Fixed Deposit when invested for over a year as compared to the one invested for a year.

Amount Invested

The principal amount that you invest in a fixed deposit plays a key role in deciding the interest rate to be applied on your Fixed Deposit. Because of the competition in the market, the financial organizations offer lucrative interest rates starting from a low amount and it increases to a certain extent for increasing amount.


Renewals make room for betterment of interest rates on Fixed Deposits. As an investor you can sign up for higher interest rates on fixed deposits by availing auto renewal facility. This not just enhances your amount, but also makes sure that you don’t have to keep track of dates for renewal. Most of the banks furnish their customers with additional renewal benefit who opt for auto renewal. It also enables you to check the maturity amount at absolutely any point of time with the Fixed Deposit Calculator.


Age of the investor is another significant factor in deciding the rate of interest to be levied on a fixed deposit. Senior citizens usually earn higher interest rates as compared to average investors. The banks offer up to 0.5 percent additional interest rate on Fixed Deposits if it’s held by a senior citizen.

Economic State

The current economic conditions of the country paired with the financial policies have a powerful say on the interest rates bestowed upon fixed deposits. While a stable state can enhance the interest rates, a sudden low can take a toll on the interest rate on Fixed Deposit, equally.

It’s true that fixed deposits open a wise horizon in front of the investors, with an incredible opportunity to avail the highest rate of return amidst all the zero risk investment opportunities and conjure their corpus for post-retirement period efficiently. But going for a Fixed Deposit blindly generates reverse results. So, to get your hands on the highest interest rates for your Fixed Deposit against your principal amount do keep in mind the above factors and research on these thoroughly. This will make you analyze all the available options and finally opt for the one that’s the most beneficial for you!


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