Here’s What You Need To Know Before Opting Auto-Renewal Option On Your FDs

Fixed deposits are one of the most attractive investment strategies, especially for senior citizens, when it relates to risk-free investment options that give assured returns. As it is a frequent source of investing, many individuals invest in fixed deposits (FDs) in several banks at a time. Most of the banks allow customers to opt for the auto-renewal option to keep track of various FDs and make the task hassle-free. This implies that your FD is renewed without you having to use mobile banking or visit a bank branch. Utilising this method, if they don’t renew the FD and the money lies in their savings bank account, depositors can save on the interest they might forfeit. For online FDs, the maturity profits are directly credited to the depositor’s savings bank account. FD’s depositors are prevented by the auto-renewal option from the agony of visiting the branch or using the internet or mobile banking service. 

Should I opt for the Auto-Renewal option on FDs you ask?

There are also a few drawbacks to the auto-renewal function. Experts claim, however, that if you opt for the auto-renewal option, particularly in the current declining interest rate paradigm, you may not get the best interest rate. For greater flexibility, it will therefore be easier to do it manually. Furthermore, you must note, the auto-renewal strategies differ across banks. Although others may renew for the same time as the initial FD, some may have a renewal policy for a limited time only. 

An example of Bank ‘XXXX’

Tenure	FD Interest rate
211 days to less than 1 year	4.40%
1 year to less than 3 years	5.10%
Above 3 years	5.30%

 

Assume you’re going for a three-year FD with Bank ‘XXXX’ on the above example and your FD has automatically extended for 1 year at the end of the tenure as per the bank’s rules. You will get a lower rate of interest in such a situation. In such examples, it is, therefore, safer to manually manage bank FDs in such conditions so that you can observe and see what fits best for you.         

The post Here’s What You Need To Know Before Opting Auto-Renewal Option On Your FDs appeared first on informalnewz.