Quick Gains: Unveiling Short-Term FD Rate Options
June 11, 2025
Looking for a quick and reliable way to earn higher returns on your savings? You can consider investing in short-term Fixed Deposits (FDs). With attractive interest rates and flexible tenure options ranging from 7 months to 1 year, such FDs could help you grow your wealth without parking your funds for too long.
In this blog, we have dissected the concept of short-term FDs and the steps you should take to find the best short-term FD rates to maximise your returns. Let's dive in!
What is Short Term FD?
Short-term deposits generally have a deposit tenure ranging from 7 days to 12 months. The interest rates applicable on short-term deposits are higher than regular savings account interest rates, making them a viable option for investors seeking higher returns in a secure way and in a short period of time.
Pro Tip: Invest in short-term FDs only if it's aligned with your investment goals. Consider investing in long-term FDs if you're seeking long-term growth.
Understanding Short-Term FD Rates
Let's talk about how to figure out best short-term FD rates so you can make an informed decision. Generally, small finance banks offer higher FD rates compared to traditional banks. Some FD schemes offer interest rates higher than 8% p.a. for a shorter tenure. Compare different FD products, go through the fine print and invest accordingly.
Making the Most of Short-Term FDs
1. Compare Interest Rates
Short-term FD rates vary from bank to bank. It's important to compare these rates and choose the bank that offers the highest return on your investment.
2. Consider the Tenure
The tenure of a short-term FD can range from 7 days to 12 months. Evaluate your financial goals and choose a tenure that aligns with your needs. For example, if you are saving for a vacation that you are going on six months later, you may consider investing in a short-term FD with a 5-month tenure.
3. Reinvest Your Returns
When your short-term FD matures, consider reinvesting the amount. With this strategy, you can compound your earnings and achieve even higher returns over time.
Factors Influencing Short-Term FD Rates
Certain factors may affect short-term FD rates. Understanding them will help you decide the right investment time and amounts to maximise your income.
Repo Rate Change
Repo rate is the rate at which the central bank (RBI) lends money to commercial banks. Typically, when the repo rate is lowered, FD rates may decrease as banks have cheaper access to funds. Conversely, higher repo rates can lead to higher FD rates subject to terms and conditions as imposed by the bank.
Investor Age
Banks offers higher FD rates to senior citizens. The additional rate varies across banks. For instance, Ujjivan SFB offers additional 0.5% interest rate to senior citizens.
Demand for Credit
Banks’ need for deposits to lend out as loans can affect FD rates. Higher demand for loans can lead banks to offer higher interest rates,
Inflation
Higher inflation typically leads to higher interest rates, including FD rates, as banks try to offer returns that exceed the inflation rate to attract depositors.
Market Liquidity
High liquidity generally leads to lower rates as banks have ample funds, whereas low liquidity can push rates higher.
Final Thoughts
Go for short-term FDs only if you have urgent liquidity needs. Also, always consult a financial adviser before taking any investment decisions to avoid unpleasant surprises. Evaluate your financial goals, compare short-term FD rates and invest accordingly.
Looking to grow your savings? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
FAQs
1. How do I choose the best short-term FD rate?
To choose the best short-term FD rate, compare rates offered by different banks and financial institutions. Also, look for additional benefits like higher interest rates for senior citizens, tenures offered, etc.
2. How does the tenure affect short-term FD rates?
Generally, longer tenures within the short-term range (e.g., 6 to 12 months) offer higher short-term FD rates compared to very short tenures (e.g., 7 days to 3 months).
3. What is the shortest period for FD?
The shortest period for FD is 7 days.
4. What is the minimum amount required to invest in a short-term FD?
The minimum amount can vary from bank to bank. However, generally the minimum investment amount is ₹1,000. This may go up if you're looking for premium FD products.
5. Can Tax-Saver FDs be considered as short-term FDs?
Tax-Saver FDs come with a lock-in period of 5 years and offers tax exemption up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. However, the purpose of such FDs is entirely different and shouldn't be clubbed in the short-term FD category.
Latest Blogs
Co-Applicant in Home Loan: Benefits & Rules You Should Know
June 09, 2025
Buying a home is often a family decision, and financially, it can be a big one. To make it easier, many people apply for a joint home loan by adding a co-applicant.
Introducing Ujjivan Rewardz: Banking That Rewards You
June 09, 2025
At Ujjivan Small Finance Bank, we believe your loyalty deserves to be rewarded. That's why we've created Ujjivan Rewardz, a loyalty program that adds value to your everyday banking.
Why You Should Book Your Fixed Deposit Now, Before FD Rates Are Cut
June 09, 2025
The Reserve Bank of India (RBI) has recently cut the repo rate by 50 basis points, bringing it down to 5.50%.
Cash Deposit Limits in Business Current Accounts: An In-Depth Guide
June 03, 2025
Managing cash deposits is a crucial aspect of business banking. Different types of current accounts come with varying limits on free cash deposits and associated charges.
Decoding Banking Jargons: What is Amortization Schedule?
May 31, 2025
Mr. X, a 32-year-old IT professional in Pune, finally decided to buy his dream 2BHK flat. After months of site visits, he zeroed in on a ₹75 lakh apartment and got a home loan of ₹50 lakhs for 20 years at an interest rate of 8% p.a. He decided to make a down payment of the remaining ₹25 lakh from his own pocket.
Related Blogs
Why You Should Book Your Fixed Deposit Now, Before FD Rates Are Cut
June 09, 2025
The Reserve Bank of India (RBI) has recently cut the repo rate by 50 basis points, bringing it down to 5.50%.
Fixed Deposit vs. Post Office Time Deposit: Which One Should You Choose?
May 29, 2025
Fixed deposits are among the most trusted investment options in India. They offer safety, steady returns, and are easy to understand.
MythBuster: Do You Need to Have a Savings Account to Open an FD?
May 26, 2025
Think you must have a savings account before opening a Fixed Deposit (FD)?
Best Investment During a Volatile Market? Fixed Deposits Could Be It
May 07, 2025
When the equity markets tumble, crypto takes a nosedive, and even gold shows inconsistent trends, Indian investors often turn to one of the most traditional instruments: Fixed Deposits (FDs).
Earn Higher Interest Rates on Fixed Deposit with This Account
March 28, 2025
The RBI’s Monetary Policy Committee cut the repo rate by 50 basis points to 5.50% in its June 2025 meeting, marking the second consecutive reduction within six weeks to support growth amid benign inflation.
Quick Links
Follow us
Download our Mobile Banking App
Download our Hello Ujjivan App
Registered with DICGC
© 2025 Ujjivan Small Finance Bank Ltd. CIN NO: L65110KA2016PLC142162