The interest rate on FDs with terms ranging from one to two years has been hiked to 5.45 percent, according to the Union Bank of India website. The interest rate offered for two years to less than three years has been revised to 5.50 percent.
On June 8, 2022, the Reserve Bank of India (RBI) raised repo rates by 50 basis points during its monetary policy meeting. In just over a month, the central bank has raised rates by a total of 90 basis points. In the next few months, more banks are likely to raise FD rates, which is excellent news for FD investors.
How to tweak your FD ladder in the current situation
Making an FD ladder is an alternative since it allows you to split a large deposit into multiple parts and book each part after a period of time to get the average return and periodic liquidity when interest rates are volatile. It is, however, critical to select the appropriate deposit tenure and frequency. In a rising rate environment, maintaining the tenure and gap between deposits short is critical to ensuring that the deposit reaps the benefits of rising rates at maturity. Keeping the duration and difference between deposits short in a rising rate scenario is critical to ensuring that the deposit reaps the benefits of higher rates at maturity. To complete a stable ladder, progressively increase these.