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What are Fixed and Floating Interest Rates? Which is Best for You?

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No matter which investment scheme you choose, deciding on the Fixed and Floating Interest Rates is always a complex choice. If you are looking for the best investment scheme that can give you higher returns, it is good to do a thorough grounding on each and every aspect of it. Also, you must have a detailed knowledge about fixed and floating interest rates so that you can choose the best investment option suitable to your needs. This article digs deeper and highlights the major differences between fixed rates and floating rates of interest to help you decide which will work best in your case.

Fixed and Floating Interest Rates

Fixed Interest Rate: As part of the fixed interest rate, the interest rate that the bank will charge on your investment schemes will be fixed throughout the investment scheme. In this case, the interest does not fluctuate according to the market trends.

The benefits of fixed interest rate:

  1. The interest rate remains unchanged irrespective of the market trends.
  2. The fixed interest rate is good for those who are good in budgeting and want a fixed monthly profit on their investment.
  3. Fixed interest rate brings in a sense of security.

Floating Interest Rates: As the name depicts, investment schemes with floating rate of interest varies with market conditions which mean, if the market price rises, you will get more profit on your investment and if the market price drops, you are most likely earn less profit.

Benefits of Floating Interest Rates:

  1. Investments with floating rate of interest attract yield hungry investors who want to earn more on their investment and if any chance the interest rate fall, it will be for a certain period of time and floating interest rate will help you save big.

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When it comes to choosing a fixed or a floating interest type, the decision mostly depends on individual needs. A person who wants fixed returns on their investment can go for a fixed interest rate while for those who are ready to take some risk and desire to earn some extra money on their investment (at times) should choose floating interest rate schemes.

Banks offer many investment options with floating and fixed deposit interest rates. Fixed deposit is one of the best and the safest investment options with fixed interest rates for the nominated term. However, any investment in bonds, mutual funds, and gold furnish floating interest rate. To find the current FD interest rates, you can visit the respective bank website or the bank branch to get detailed information about the same.

Listed below are the FD interest rates offered by different banks based on certain parameters:

Institution Interest  Period Investment
Yes Bank 5.00% – 7.45% 7 days to less than 10 years Less than Rs 1cr.
Axis Bank 3.50% – 6.25% 7 days to less than 10 years Less than Rs 1cr.
HDFC Bank 3.50% – 6.50% 7 days to less than 10 years Less than Rs 1cr.
ICICI 5.25% – 6.45% 7 days to less than 10 years Less than Rs 1cr.
SBI 5.50% – 6.75% 7 days to less than 10 years Less than Rs 1cr.

Conclusion: You can calculate the FD interest rate using online calculators. These are automated and provide you detailed information on your search with just a few simple clicks, thus saving a lot of your time and keeping you free from a physical excursion that you would otherwise make by visiting the bank branch. Interest rates on fixed deposits differ widely from one bank to the other. So it is wise to do a thorough research for the same before making any investment.

I hope This tutorial of Fixed and Floating Interest Rates is very useful to all of you. If you like this post please share with your friends via social network and if you have any questions regarding this post then you can ask with me in below comment box.

About Chintu Yadav 2 Articles
I am having more than 5 yrs experienced in content writing. I enjoy writing on many subjects and topics. As of now, I am sharing information like mutual fund, Investment, credit card, personal, car and home loan, aadhaar card information & more. I also enjoy writing articles for online blogs.

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