- Date : 15/05/2023
- Read: 3 mins
Bajaj Finance offers one of the highest interest rates on its FD at 8.35% for normal individuals and 8.60% for senior citizens. But is the FD the right choice?
Fixed Deposit (FD) schemes allow you to earn a guaranteed rate of return on your investment. You can invest any amount in the scheme offered by a bank, post office, or a Non-Banking Financial Company (NBFC). You can choose a tenure ranging from 7 days to 10 years and save for your short and long-term financial goals.
Bajaj Finance is a leading NBFC offering customers corporate fixed deposit schemes. The interest rates are attractive, and the company further raised them from 1st April 2023. After the rate hike, Bajaj Finance offers its 44-month FD at an interest rate of 8.35% per annum for normal individuals and 8.60% per annum for senior citizens. The rates are available for cumulative and non-cumulative FDs, and the interest income is paid annually.
While the interest rate is a plus, are Bajaj Finance FDs a good choice? Let’s assess –
Merits of Bajaj Finance Fixed Deposit Schemes
Here are some of the benefits of investing in Bajaj Finance FDs –
- The high interest rates offered by the scheme that too for shorter tenures.
- AAA credit rating on the FD makes it a safe option and protects against default risk.
- The minimum deposit amount is Rs.15,000, which is affordable.
- As debt mutual funds have lost their tax advantage, the FD becomes a lucrative option for investors.
- The other tenures also offer attractive interest rates. For instance, the interest rate on 3 and 4-year deposits is 8.05% which is higher than other banks offer.
- Senior citizens can also invest in Senior Citizen Savings Scheme (SCSS) for 5 years. The scheme offers 8.2% interest which is lower than what Bajaj Finance FD offers.
Also Read - Read about the reasons senior citizens should invest in tax-saving FDs
Demerits of Bajaj Finance Fixed Deposit Schemes
The demerits of the FD scheme are as follows –
- There is no insurance coverage in the FD scheme. Usually, the Deposit Insurance and Credit Guarantee Corporation (DICGC) offers insurance protection on bank deposits up to Rs.5 lakhs. This is not available on NBFC FDs.
- The interest earned is taxed in your hands at your slab rates.
- The returns are not inflation-adjusted. Debt mutual funds can be a good alternative where the returns are inflation-adjusted. Debt funds are also liquid compared to FDs.
What should you do?
Bajaj Finance FD schemes offer guaranteed returns, and the interest rates are also high. You can invest in the schemes to earn higher returns. However, do not concentrate your portfolio on FDs only. The returns are not inflation-adjusted, and you might lose out on the potential of equity-oriented returns.
So, allocate a part of your portfolio to FDs, and Bajaj Finance FDs can be a good option given their higher interest rates.
Also Read – Find out where you should invest - bank fixed deposits or debt funds.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
Source:
Fixed Deposit (FD) schemes allow you to earn a guaranteed rate of return on your investment. You can invest any amount in the scheme offered by a bank, post office, or a Non-Banking Financial Company (NBFC). You can choose a tenure ranging from 7 days to 10 years and save for your short and long-term financial goals.
Bajaj Finance is a leading NBFC offering customers corporate fixed deposit schemes. The interest rates are attractive, and the company further raised them from 1st April 2023. After the rate hike, Bajaj Finance offers its 44-month FD at an interest rate of 8.35% per annum for normal individuals and 8.60% per annum for senior citizens. The rates are available for cumulative and non-cumulative FDs, and the interest income is paid annually.
While the interest rate is a plus, are Bajaj Finance FDs a good choice? Let’s assess –
Merits of Bajaj Finance Fixed Deposit Schemes
Here are some of the benefits of investing in Bajaj Finance FDs –
- The high interest rates offered by the scheme that too for shorter tenures.
- AAA credit rating on the FD makes it a safe option and protects against default risk.
- The minimum deposit amount is Rs.15,000, which is affordable.
- As debt mutual funds have lost their tax advantage, the FD becomes a lucrative option for investors.
- The other tenures also offer attractive interest rates. For instance, the interest rate on 3 and 4-year deposits is 8.05% which is higher than other banks offer.
- Senior citizens can also invest in Senior Citizen Savings Scheme (SCSS) for 5 years. The scheme offers 8.2% interest which is lower than what Bajaj Finance FD offers.
Also Read - Read about the reasons senior citizens should invest in tax-saving FDs
Demerits of Bajaj Finance Fixed Deposit Schemes
The demerits of the FD scheme are as follows –
- There is no insurance coverage in the FD scheme. Usually, the Deposit Insurance and Credit Guarantee Corporation (DICGC) offers insurance protection on bank deposits up to Rs.5 lakhs. This is not available on NBFC FDs.
- The interest earned is taxed in your hands at your slab rates.
- The returns are not inflation-adjusted. Debt mutual funds can be a good alternative where the returns are inflation-adjusted. Debt funds are also liquid compared to FDs.
What should you do?
Bajaj Finance FD schemes offer guaranteed returns, and the interest rates are also high. You can invest in the schemes to earn higher returns. However, do not concentrate your portfolio on FDs only. The returns are not inflation-adjusted, and you might lose out on the potential of equity-oriented returns.
So, allocate a part of your portfolio to FDs, and Bajaj Finance FDs can be a good option given their higher interest rates.
Also Read – Find out where you should invest - bank fixed deposits or debt funds.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
Source:
