How External Factors Influence Fixed Deposit Interest Rates

FDs, or Fixed Deposits, have long been a famous investment avenue due to their assured returns and stable nature. However, the Fixed Deposit Interest Rate offered is not static; they fluctuate based on various external factors, due to which it is considered a lucrative investment. 

In the current digital times, investment is not about going to financial institutions and finally taking days to make a call. It’s all about making the right choice simply via the right application on your smartphone while sitting in your comfort zone. 

What are fixed deposits, and why do people opt for them majorly?

FDs are an investment type offered by various banks as well as financial institutions where a potential individual deposits a sum of money for a predetermined period at a fixed rate of interest. 

For those who are not aware, please keep in mind that these deposits cannot be withdrawn before the date of maturity without incurring a penalty, hence the term “fixed”. 

  • Inflation Rates

Inflation refers to the increase in prices of goods and services over time. When it is considered high, the individual’s purchasing power witnesses a decline.

(Note: The financial institution considers inflation rates when setting the interest rates for FDs.)

  • Economic circumstances

The overall economic conditions, including GDP growth, rate of unemployment, and market stability, impacts the overall rates. During specific periods of economic growth, banks might lower FD rates to encourage lending, thus stimulating investment and spending as well. 

  • Government Policies

Policies of the government, especially which are related to fiscal policies as well as taxation, can influence the Fixed Deposit Interest Rate. Taxation on interest income from fixed deposits can affect the net returns for investors. 

Navigating the fluctuations in FD rates necessitates a pretty comprehensive understanding of these external factors, for those who are seeking constant and assured returns must monitor these dynamics closely to make informed decisions regarding their investments. 

Which is the best platform to invest in FD, and why should you opt for it?

When you open the internet, there is no doubt in the fact that you are flooded with tons of options to choose from. Around a month back, I was looking to invest in such funds and planned to calculate fd interest beforehand for a better plan. This is when one of my associates who is a master in this domain, told me about the Bajaj Finserv application.

With just a few taps on my smartphone, this app made me invest the right amount of money into a suitable medium. Highly recommended!

  1. Download the app from the App Store or Play Store.
  2. Sign up after entering your mobile number.
  3. On the home page, you will see an icon for Fixed Deposit. 
  4. Click on it and use the in-built FD interest rate calculator to simulate different situations by changing the customer type, deposit amount, tenure, and interest payout frequency. 
  5. This will help you make the best decision and get the best return on your investment. 
  6. Once you are satisfied with it, click the Invest Now button on the FD page.
  7. Fill in those values, and you are good to go.


All in all, fixed deposit rates are outcomes of intricate interactions with external forces. Understanding inflation, the policies of the government, current economic circumstances, etc, gives investors the power to foresee shifts and make wise investment decisions. 

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