Fixed Deposits (FDs) offer a great opportunity to preserve and grow your savings in the most risk-free way possible. They offer predictable returns, are backed by Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance, allow for flexible tenure options, and even provide regular interest payouts. Their popularity is well reflected in the Reserve Bank of India (RBI) data, which shows that bank deposits reached approximately ₹10.27 trillion in the fiscal year 2023.
But what if you could combine the benefits of fixed deposit schemes with the convenience of automatic management? This is where the auto-renewal option in FDs comes into play.
What is auto-renewal in fixed deposits?
Auto-renewal is a facility offered by banks that lets your FD investments enjoy uninterrupted growth without manual intervention. Upon maturity, instead of the funds being credited back to your account, the system automatically reinvests both the principal and the accrued interest at the current interest rate.
IndusInd Bank Fixed Deposits also offer an auto-renewal option that you can select at the time of investment or anytime during the term. With the best-in-class interest rate, your investment can continuously grow at an impressive rate without any active management from your side.
Here are the additional FD benefits you get:
| Quick booking process | Book your FD online using only your PAN and Aadhaar details. No bank visits or paperwork needed. |
| Multiple interest payouts | Choose how you want to receive your interest payouts, i.e., monthly, quarterly, half-yearly, annually, or at maturity. |
| Tax-saver FD | Invest in a five-year FD to reduce your tax liabilities while growing your savings. |
| FD return calculator | Use the FD calculator to calculate your maturity amount and plan investments accordingly. |
Book your IndusInd Bank Fixed Deposit today to lock in exceptional rates and watch your savings grow effortlessly.
Advantages of auto-renewal in fixed deposits
There are many benefits of the auto-renewal facility in fixed deposits, such as:
Higher returns over time
With each auto-renewal, the interest earned in the previous FD term is added to the principal for the new term, thus enhancing the effect of compound interest over successive periods. Over the long term, this strategy maximises earnings through continuous reinvestment and interest accumulation.
Reduced risk of forgetting
Auto-renewal saves you from the hassle of keeping track of maturity dates and going through the process of renewing or opening new fixed deposit schemes. This feature ensures that your funds are consistently earning interest without any gaps.
This can be particularly beneficial for those who have multiple FDs and can’t regularly monitor their investments or prefer a passive approach to managing their finances.
Avoiding idle funds
When an FD matures, and you don’t renew it, the funds usually move to your savings account. Savings accounts generally offer nominal interest rates and could lead to reduced returns on your money.
By opting for auto-renewal, you prevent this situation. Your funds are automatically reinvested, and you continue to earn a higher interest rate. This way, you can maximise your returns and avoid the pitfall of idle funds sitting in a low-interest account.
Financial discipline
An -naturally promotes a disciplined approach to saving. By automatically reinvesting the funds, it reduces the temptation to spend the principal and interest, thereby encouraging long-term savings and investment behaviour. This can be highly beneficial for those looking to build their savings without constant monitoring or decision-making.
Key takeaways
The auto-renewal option in fixed deposits brings several benefits, such as uninterrupted growth, continuous compounding, convenience, and better financial planning. Your funds don’t sit idle after maturity and keep earning optimal returns without any manual intervention. Just make sure to stay informed about prevailing interest rates and adjust your strategy as needed to maximise your returns.
