It may seem difficult to manage several fixed deposit accounts. However, tools like a fixed deposit interest calculator make the task simple. Besides, there are certain ways to manage multiple FDs easily. Here’s a look.
Manage Interest Income
Always try to reinvest the interest for the fixed deposits paying the best rates of interest. Then you can earn more interest every year. You can even try interest payouts for your other FDs and use the interest earned to finance your expenses or invest in other avenues. Reinvestment works best for deposits of a longer tenure. So, if suitable, you can also opt for shorter compounding period deposits.
Break Your Deposits
You can open a sweep-in account to minimise the interest loss. Here, the allowed predetermined withdrawal amount is low. Usually, the account permits withdrawals in multiples of ₹5,000. Consider using this facility and try to link several FDs to your savings account. For a reverse sweep into a savings account, the best bank allows breaking the fixed deposit at the lowest interest rate. Avail yourself of this facility.
Make a Deposit Hierarchy
Prioritise your investment periods when you decide to invest in FDs. Break your amount reasonably into blocks to arrange them systematically as per the periods they need to be invested for. So, say, if your amount is ₹5 lakhs, you can make 2 FDs of ₹2.5 lakhs each. You can invest one for 2 years and another for 5 years. This is better than investing all your money in an FD of one tenure. You can thus keep a backup for any emergencies. You can then choose to keep the bigger deposit intact and break the smaller one.
When interest rates are going down, you can break one FD so that the lower rate of interest you have earned can be invested at a higher rate in another FD. Use a fixed deposit interest calculator to check the interest rate. Keep the tenures suited to your fund requirements to avoid premature withdrawals as much as possible.
If all your FDs are in a single bank, use its net banking facilities to manage your fixed deposits online. You can then digitally book, view or redeem the FDs online. If you hold them in separate banks, consider using applications like ‘One View’ to view and manage multiple fixed deposits online. The app gives a summary of your FDs including the ones of your family members. Usually, the service comes with real-time data for free. There are no security risks since it’s a view-only tool.
If you choose a good bank, you can already get the best fixed deposit interest rates up to 6.9%. On top of that, if you use an overdraft (OD) facility against an FD with the least interest rate, you can borrow money at 1-2% above that rate. Thus, multiple FDs work well with this facility. Ensure to use OD to finance emergency fund requirements.
Follow these tips and manage all your FDs smartly without any hassle!