FD – Should I change bank for higher interest?

POSTED BY Prasad ON January 14, 2012 1:12 pm COMMENTS (9)

I have opened a Fixed Deposit A/c. in State Bank of India @ ROI 9.25% p.a. for 1 year
This was opened about 1 month back.
Now I see that Karur Vysya Bank offering ROI 10% p.a for 1 year.
Is it wise to close the FD at SBI & transfer it to KVB for 10% p.a. ROI ?

9 replies on this article “FD – Should I change bank for higher interest?”

  1. Dear Srivatsan Ganesh, please look into the whole discussion & the fact that the person is running Max Gain home loan. Please do not answer in isolation for that 4% interest rate.

    Also as the FD is an online one, the question of paper work does not arise.



  2. Dear Prasad, please confirm it from SBI people. As far as i know there is no such restriction of registration for using OD account for transactions.

    Regarding the interest rate of 8.75% in Max Gain & 9.25% in FD, please compare the Post tax return of FD to ma gain rate.



  3. srivatsan ganesh says:

    What about the one month interest ., surely it will be calculated @4% only as you are cancelling it earlier than maturing., and also the process – it will take time for applying FD
    Thing twice 🙂

  4. Prasad says:

    Thanks Ashal.

    So you are telling even before possession, I can park the Max Gain OD A/c. & still withdraw it anytime?
    Somebody told me that till registration of house(now under construction), I can’t avail the benefit of MaxGain OD A/c.

    Also note, for first year, I’m still being charged only 8.75%p.a for my home loan.
    1st year – 8.75%
    2nd & 3rd Year – 9.50%
    4th year on wards – floating

  5. Dear Prasad, In case your home loan is Max Gain, you are losing money if you are keeping it in FD. Please put that money right now in the Max Gain OD account. The outstanding loan amount ‘ll come down immediately considering this FD amount as prepayment of your loan & accordingly the 10.5% interest ‘ll be charged on your reduced loan amount. Thus you ‘ll earn 10.5% interest indirectly.

    Yes the amount is free to use as it’s fully liquid & you may withdraw as per your wish.



  6. Prasad says:

    > Why only 1 year?
    End of 1 year, I will get possession of my house (now under construction)
    And since I have opted for SBI MaxGain Home Loan, I can park my emergency fund in this A/c., which will be deducted from principal amount for interest calculation.
    (this is what I have been told of)

    BTW, thanks for that 10year FD.
    I’d prefer MF over FD for 10years.

  7. Dear Prasad, May I know the reason why you preferred only 1Y FD & not higher term?

    FYI please, SBI is the only bank offering max. int. rate i.e. 9.25% for the longest duration i.e. 10Y term.

    Please think over it.



  8. Prasad says:

    Hi Ankur,

    Thanks for your reply.

    Both the banks have the internet banking, So its not much of paper work, & does not consume more time too.

    Moreover all the investments are in SBI. Would be better if I spread it out among different banks?

  9. Ankur Lakhia says:


    How many times you will keep doing this as interest rates would keep varying? Do you have enough time on hand for completeing all documentation formalities for making such changes? Instead of focusing on small interest rate differences, it would be better to stick to couple of reputed banks which offer convenience like having branch / ATM nearer to your home / work place and which can easily provide services when required.

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