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How To Choose Between Fixed And Variable Rates Of Interest?

Investors have the choice in fixed deposit interest rates also. A fixed deposit account can provide returns based on variable rates, also known as floating rates, and fixed rates. The floating rate on a fixed deposit, as the name explains itself, keeps changing depending on the market rates. It gets revised at regular intervals, moreover, every quarter. However, it may vary from bank to bank.

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Variable Rates vs. Fixed Rates

  • The Variable-rate of interest is not set and fixed for the entire lock-in period of an FD. It moves in tandem with a reference rate, which is reset periodically. On the other hand, fixed-rate FDs provide returns at a fixed and predetermined interest rate which will be applicable to your FD account for the entire lock-in period.

  • With variable interest rates, you need not close and re-book your FD to take advantage of the changed interest rate during the tenor of an FD. On the contrary, fixed-rate fixed deposits do not entertain any change in interest during the entire lock-in period.

  • Variable interest FDs are beneficial when interest rates are rising because the interest rate in the prevailing market will be applicable to an FD whenever rates will be revised during FD tenor. Currently, Bajaj Finance is one of the NBFCs offering the highest Fixed Deposit interest rates in India up to 7.25%.

  • Variable interest rates are beneficial for long-term investors whereas fixed rate fixed deposits will be helpful to every investor with different time horizons. Whether you want a short-term deposit or a long term deposit, you will be supported by fixed-rate FDs to meet your financial goals.

  • Variable-rate FDs are suitable for the financially literate depositor who can read the market flows, a depositor who is not a risk-averse to take a call of future interest rates/inflation as the rates will be aligned to the market every calendar quarter.

Therefore, if you are a long term investor having knowledge of the market trends and can deposit your funds in the hope of earning higher returns without being afraid of interest rate fluctuations, variable interest rate fixed deposits are for you.

What is the Senior Citizen Saving Scheme

Senior Citizen Savings Scheme (SCSS) is a government-sponsored savings instrument offered to Indian residents aged over 60 years and above.

A senior citizen investor over 60 years should consider safe and reliable fixed-rate FDs. One of the highest yielding fixed deposits for senior citizens is offered by Bajaj Finance. Following are the distinguished benefits of Bajaj Finance FD:

  1. It offers an attractive fixed interest rate of up to 7.25%.

  1. Opening an FD account is now easier than ever. Take advantage of convenient fixed deposit online processes with Bajaj Finance. It is a paperless process. You can invest from the comfort of your home. No need to visit the branch office. You are going to receive FD details at your registered details by courier. Just sit at home and see your funds growing.

  1. You can choose tenure ranging from 12-60 months which is a wide and flexible range to choose a tenor.

  1. It offers non-cumulative fixed deposits with the periodic interest payouts option. It is a great help for dependent senior citizens. Choose an option from monthly, quarterly, half-yearly, and annually to receive interest periodically in your account.

  1. As senior citizens are so much concerned about the safety of their funds, they should know that Bajaj Finance FDs are accredited with ICRA’s MAAA (Stable) and CRISIL’s FAAA/Stable. These are the highest safety ratings in the industry.

Variable FD interest rates fluctuate across the tenor around the reference rate. They prove to be useful when the FD rates are rising consistently. However, you also take the risk of reduced interest earnings when the interest rates are lowered. Variable interest rates are beneficial for you if you are interested in long-term investment. On the other hand, fixed interest rates come in handy irrespective of whether you are interested in short or long-term investment.

However, the returns are satisfactory only if you deposit in an FD that offers a high-interest rate like Bajaj Finance FD. It offers an interest rate of 7.25% and lets you choose between periodic interest returns and accumulated returns by investing in either non-cumulative or cumulative FDs respectively. Also, it is a safe investment option as it has been rated highly by credit rating agencies like ICRA and CRISIL.


Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.


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