We often come across big hoardings sponsored by banks that proclaim in bold letters ‘9% returns on your fixed deposits’. But one thing that the advertisements don’t mention is the time period for these. So investors need to check the rate of fixed deposits offered and the time period, before actually making the investment. The ICICI Bank advertisement shows 9% interest on fixed deposits. The time period in this case is 890 days. If you keep it for a year then the interest rate is slightly low at 6.75%. In the case of HDFC Bank, interest rates for 730 days (or 2 years and 5 days) is 8.25%.
An investor also needs to know that even the difference of a few days difference could result in losses. Consider this, for one year and one day HDFC Bank gives 7.25% return but if you retain it for 14 days more the return increases to 8.25%.
Another catch lies in the penalty on premature withdrawals. While ICICI Bank charges for premature withdrawals, HDFC Bank does not. So dont get carried away by the hoardings - theres more to them than meets the eye.