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Earn interest up to 7.75% p.a. by investing in a Bajaj Finance Fixed Deposit | Stable Rating - CRISIL’s FAAA & ICRA’s MAAA

 

What is the Monthly FD Payout?

Fixed Deposits (FD) are investment options where you can deposit a certain amount for a specific period at a fixed interest rate. There are generally two types of FDs offered by banks: cumulative and non-cumulative. When you opt for the cumulative FDs, you are paid the invested amount with interest at the end of the maturity period. In the case of non-cumulative FDs, commonly known as monthly payout FD, you get payouts every month. The payout period can also be chosen as quarterly, semi-annually, or on a yearly basis as per your financial goals.

The monthly payout FD schemes are best suited for those who wish to receive a monthly fixed income. Every month, this type of term deposit scheme pays the investors a guaranteed return at a specific interest rate. This type of investment is ideal for pensioners looking to increase their monthly income by depositing their hard-earned money.

How to Get Monthly Interest on Fixed Deposits?

As is the case with the fixed deposit schemes, you have to deposit your amount with a bank or any NBFC for a specific period and at a certain interest rate. The interest amount which gets accumulated is regularly re-invested in the scheme, and the bank pays the total amount at maturity along with the principal amount. The interest rate on the FD varies according to the tenure chosen and the amount invested.

If you opt for a monthly interest payout fixed deposit, the bank gives you the facility to receive interest every month. Generally, the interest on the FD is calculated and compounded quarterly. For example, if you invest Rs. 1 lakh in an FD scheme that offers 6% interest annually, your interest returns are compounded at the rate of 1.5% every quarter. However, in the case of monthly payout FD schemes, the interest is calculated and credited to your account every month.

How to Calculate Fixed Deposit Monthly Interest Payout?

Fixed deposit amounts and interest are calculated using the formula of compounding. The fixed deposit interest rate provided by banks is the annual interest rate. The interest generated from the investment can be paid out monthly as in the case of a monthly interest payout fixed deposit, or it can be reinvested along with the principal amount to be paid at maturity. Interests that are invested in the FD generate interest at the same rate as the principal amount.

The formula used to calculate the final amount by applying the compound rate of interest is:

A=P [1+(r/12)/100)]^n

Where the variables stand for:

A: The amount at the end of the investment period

P: The principal amount invested at the start of the FD

R: Annual interest rate

n: Denotes the tenure of investment when the amount is being calculated

Since banks generally apply annualized interest rates, r is proportionally computed for investment tenures that are less than one year.

The formula for calculating the amount of interest earned will be simple (A-P). This means the principal amount or amount invested at the start can be subtracted from the final amount at the end of the investment.

Monthly Interest Rates Offered by Indian Banks

Financial Institutions

Regular Rate of Interest

Senior Citizen Interest Rates

Minimum Deposit Amount

Tenure options

Kotak Mahindra Bank

2.50% - 5.61%

3.00% - 6.14%

Rs. 5000

7 days to 10 years

ICICI Bank

2.50% - 5.45%

3.00% - 5.95%

Rs. 10,000

7 days to 10 years

IDFC First Bank

2.50% - 6.00%

3.00% - 6.50%

Rs. 10,000

1 year to 10 years

Axis Bank

2.50% - 5.75%

2.50% - 6.50%

Rs. 5000

7 days to 10 years

HDFC Bank

2.50% - 5.60%

3.00% - 6.35%

Rs. 5000

7 days to 10 years

State Bank of India

2.90% - 5.40%

3.4% - 6.2%

Rs. 1000

7 days to 10 years

 

Disclaimer: The aforementioned Bank FD interest rates are valid as of 21-Mar-2022, and may be subject to change as per bank announcements.

Monthly Interest Rates Calculator

Most of the banks and NBFCs that provide fixed deposit facilities have designed an FD calculator, and it's available on their official website. An FD monthly payout calculator helps you estimate the amount you will receive monthly on investing a certain amount in the fixed deposit schemes. You can follow the given steps to use the FD monthly payout calculator:

Step 1: Visit the financial institution's website where you wish to sign up for the fixed deposit.

Step 2: Proceed to their FD calculator page like the one on Bajaj MARKETS.

Step 3: Input the deposit amount you plan to invest.

Step 4: Next, choose the tenor of the FD from the options like 12, 24, 36, 48, or 60 months.

Step 5: From the 'Fixed Deposit Type' option, you need to choose the 'Non-Cumulative' or the 'Monthly payout FD' option.

Step 6: As you wish to apply for a monthly interest payout fixed deposit, you must select the 'Monthly' option in the 'Interest Payout' section.

An FD monthly payout calculator helps you make an informed decision for your FD investments by instantly calculating the total receivable amount on maturity against any fixed deposit scheme.

Benefits of Fixed Deposit Monthly Scheme

The best-in-class benefits offered by monthly interest payout fixed deposit schemes are mentioned below:

  • Parking your hard-earned money in FDs is one of the safest investments, and you get to benefit from the monthly payout FDs as they can become a source of your passive income.

  • The monthly payout FD schemes are adaptable as per your investment requirements as there is no upper limit on the amount to be invested. You can invest as per your financial capability and the intended goals.

  • The banks generally charge zero processing fees to open a fixed deposit account.

  • The earnings received through a monthly income scheme are higher than the typical savings accounts.

  • The investment in a monthly payout FD is comparatively more liquid than other schemes.

  • Instead of breaking the FD that incurs a penalty, you can opt for a loan against your FD in case of any financial emergency. The loan amount can go up to a maximum of 75% of your FD value.

Eligibility Criteria for Monthly Interest Payout Fixed Deposit

The eligibility criteria to be fulfilled to open a monthly interest payout fixed deposit scheme is similar to the basic fixed deposit scheme. Some of the essential criteria are:

  • You should be above 18 years of age.

  • In the case of minors, their guardians need to open a joint account.

  • Any company, partnership firm, association, society, or trust can apply for a monthly interest payout fixed deposit scheme.

  • Any Hindu United Family (HUF) can invest.

  • NRIs are also eligible subject to the condition that they fulfill the particular requirements set up by the bank or NBFCs.

What Happens if you opt for Premature Withdrawal?

Monthly payout fixed deposits also have a premature withdrawal facility that facilitates you to close the FD before attaining the maturity date. This adds the liquidity feature to the invested amount and helps you in your financial crunch situations.

Nevertheless, you need to pay some amount as penalty charges to the bank to avail the premature withdrawal facility. This charge ranges from 0.5% to 1% of the invested amount. Some banks offer the premature withdrawal feature with zero or meager penalty charges. However, if the FD scheme is prematurely closed before the completion of 7 days from the starting date, the bank or NBFCs are not liable to pay any interest on the invested amount.

How to Convert Annual Interest Rate to Monthly Interest Rate?

You can follow these simple steps to convert the annual interest rate to the monthly interest rate to get a better understanding of your monthly payout FD:

Step 1: Start by converting the annual rate from the percentage format to the decimal format. This can be simply done by dividing the rate by 100.

Step 2: Next, divide the decimal annual rate by 12.

Step 3: Further, you need to multiply the annual rate by the interest amount to get the monthly rate.

Step 4: You can now convert the monthly rate in decimal format to the percentage format by multiplying it with 100.

Closing FD before Maturity

If you wish to close your fixed deposit account before maturity, you can visit your bank or NBFC and submit an application requesting to close the FD account. Once the bank receives your request, it will process the request and charge the premature withdrawal fees to your account. After this, the payable amount will be transferred to your bank account, and the bank will also return you the documents submitted at the time of opening the FD. Several banks offer online options to close your FD account before maturity in today's digitalization age.

You can follow the given steps to break your FD through online mode:

Step 1: First, visit the official website of your bank, where you have your FD account.

Step 2: Login by entering your credentials, like the username and password.

Step 3: Choose the 'Fixed Deposits' option from the extensive list of services available on the website.

Step 4: Next, choose the 'Close account' option.

Step 5: This will direct you to the list of the respective FDs; you need to select the account that you wish to close.

Step 6: You would be required to confirm your identity to proceed with the step.

Step 7: A confirmation message for the FD closure would be sent to your registered mobile number and email id, which you need to confirm.

Step 8: Next, the bank will deduct the applicable penalty charges and transfer the payable account to your savings account.

Step 9: To conclude the process, you can check the amount credited to your account and confirm the receipt of the same.

Bajaj Finance Interest Rates for Monthly Payouts

Generally, the maximum interest rates offered by different banks and NBFCs range from 2.50% to 5.75% for citizens below 60 years. However, the interest rates offered by Bajaj Finance FD can go up to a maximum of 7.35%. Senior citizens can benefit from an additional interest rate of 0.25% p.a. over the said rates.

Bajaj Finance provides one of the most competitive interest rates in the market, which guarantees that your investment grows substantially. The fixed deposit schemes offered by Bajaj Finance at Bajaj MARKETS have the highest credit ratings provided by CRISIL (FAAA) and ICRA (MAAA).

Regular Fixed Deposits:

Tenor (in Months)

Interest Rate for Monthly Payouts

Interest Rate for Monthly Payouts (senior citizens)

Minimum Deposit

12 -60

5.85% - 7.20%

6.10% - 7.45%

Rs. 15000

 

Disclaimer: The aforementioned Bank FD interest rates are valid as of 10 May 2022, and may be subject to change as per the NBFC’s policies.

Special Fixed Deposits:

Tenor

(in months)

Interest Rate for Monthly Payout

Non-Senior Citizens

Senior Citizens

15

6.05%

6.30%

18

6.15%

6.40%

22

6.30%

6.55%

30

6.70%

6.95%

33

6.95%

7.20%

44

7.35%

7.60%

 

Disclaimer: The aforementioned FD interest rates are valid as of 14 June 2022, and may be subject to change as per company policies.

 

 

 

 

FAQs

✔️Where is the fixed deposit money invested?

The money invested in fixed deposit schemes is locked in for a certain period, and you earn interest over the invested amount. The banks use the invested money to lend loans to other consumers and businesses.

✔️Is there a minimum and maximum limit to Rs. 1 crore monthly interest FD?

Monthly interest for a fixed deposit of Rs 1 crore varies with the tenor of your investment. The higher your investment tenor, the higher the interest rates on the scheme. The monthly interest will be calculated on the pre-decided interest rate intimated while starting your FD.

✔️Can I withdraw an FD at any time?

Yes, FD schemes have options to allow withdrawal at any point in time, subject to the condition that the bank does not have a lock-in period. In case of a lock-in period, it's suggested to withdraw after this period. 

✔️Does LIC offer any monthly income scheme?

LIC offers a monthly income scheme for senior citizens so that they can look after their expenses after retirement; generally, it has an interest rate of 7.40%.

✔️Can I double my investment in 5 years through FD schemes?

Since the interest calculation in an FD scheme is dependent on the interest rate offered and the tenure of investment. Therefore, doubling the investment highly depends on the interest rates and whether it remains consistent throughout the five years.