Wednesday, January 27, 2021
  • Home
  • About Us
  • Disclaimer
  • Privacy Policy
  • Contact Us
No Result
View All Result
WORLDHAB
  • Breaking
    • India
    • World
    • Politics
  • Business
    • Finance
    • Insurance
  • Cryptocurrency
  • Entertainment
  • Sports
    • Football
    • Cricket
    • Basketball
    • Tennis
    • WWE
  • Lifestyle
    • Fashion
    • Food
    • Health
    • Pets
    • Travel
    • Romance
  • Tech
    • Android
    • iOS
    • Games
    • Laptops
    • Mobiles
    • Gadgets
    • Social Media
  • Breaking
    • India
    • World
    • Politics
  • Business
    • Finance
    • Insurance
  • Cryptocurrency
  • Entertainment
  • Sports
    • Football
    • Cricket
    • Basketball
    • Tennis
    • WWE
  • Lifestyle
    • Fashion
    • Food
    • Health
    • Pets
    • Travel
    • Romance
  • Tech
    • Android
    • iOS
    • Games
    • Laptops
    • Mobiles
    • Gadgets
    • Social Media
No Result
View All Result
WORLDHAB
No Result
View All Result

Home » News » What Economic Factors Affect Term Deposit Rates?

What Economic Factors Affect Term Deposit Rates?

December 18, 2018
in Finance, News
26
0
Loading...

Fixed term deposits offer unique benefits. You enjoy investment security and your funds are safe even if stock prices crash. That’s because the rate is fixed for an agreed timeframe. You also enjoy higher rates of interest than traditional savings accounts. But the rates used by popular banks tend to vary from one period to another.

Loading...

So how do you know what to expect when you approach your bank for this type of investment? Here are the key factors that usually determine the term deposit rates offered by banks.

Official Bank Rate

The bank rate is the interest rate that the central bank of a country charges commercial banks for overnight loans. This rate has direct impact on all other interest rates that banks offer to customers. For instance mortgage, car loans and term deposits are all influenced by the bank rate. Before your bank tells you the interest rate it will offer for a 10,000 dollar term deposit, it will use the current bank rate as a benchmark. Generally, the lower the bank rate, the higher the interest you will receive on your term deposit.

The Amount Invested

Loading...

Commercial banks offer higher interest rates for larger investments. Typically, they specify a certain rate for a specific investment range. So you may have a rate for $1,000 to $10,000 and a higher rate for deposits that are higher than $10,000. Quite frequently, lenders allow you to negotiate the rate and other terms of the investment when you are investing large sums like $200,000 or more. When you invest a large amount of money in a fixed term deposit , you are providing funds for the bank to lend out to their customers and earn higher returns, so the bank will reward you with a higher interest rate.

Length of the Term Deposit

In most cases, the longer the term of the deposit, the better the interest rate. You will be offered a higher interest rate for leaving your deposit for  5 years than for leaving it for 2 years. This is simply because your bank wants you to keep the investment locked in for a long time. Longer term investments allow banks to have a guaranteed source of funds to serve clients who need loans.

Frequency of Interest Payment

Loading...

Your interest rate is also affected by the time and frequency of interest payment. You can receive interest payment every month, once in a quarter or half-yearly. It is also possible to roll over your interest and receive it with your deposit at maturity. If you receive interest monthly, you have a higher earning potential. So your bank may offer you a slightly lower rate if you will be cashing out your interest payments every month.

Bank’s Marketing Strategy

Your bank can offer you a high rate in order to gain an advantage over other competitors. To attract new customers, your bank can give more attractive rates. This will encourage you and many other customers to invest money in its fixed term deposit. The only way to know if your bank is giving you an attractive rate is to compare the rates offered by other competitors.

The Bank’s Financial Health

When a bank needs to raise more local funds to finance its operations, it could raise interest rates on term deposits. For instance, if a bank does not want to continue depending on overseas funding, it may increase its interest rates on longer term deposits to get a safe and reliable source of funds. Also, when demand for home and auto loans increase, it may encourage investors to keep their funds for a longer period by offering a higher interest rate.

Loading...

The Stock Market

When the stock market is bullish and the value of most stocks are rising, investors will prefer to put some of their money in the stock market. This will allow them to enjoy short term gains. Consequently, fewer investors will be interested in making long fixed term deposits that offer lower returns. At this time, some banks may offer slightly higher interest rates to encourage customers to put their funds in a more secure investment.

Share11Tweet7SendShare2Pin2Share
Previous Post

Talk at UforChange provides insight and entertainment

Next Post

5 Tips Every Cryptocurrency Investor Must Know

Chrissy Ryland

Chrissy Ryland

Chrissy Ryland - I'm a freelance writer and blogger from Northern California. I grew up loving all things entertainment and travel and now I am blessed with a career that lets me write about both of those topics along with many others. For inquiries about a story you think I might want to cover, please contact me at worldhab@gmail.com

Related Posts

How to send Happy Republic Day Stickers, GIFs On WhatsApp

Happy Republic Day 2021: How to send Happy Republic Day Stickers, GIFs On WhatsApp

January 26, 2021
Elon Musk wants to be paid in Bitcoin

Elon Musk wants to be paid in Bitcoin

January 11, 2021
Cryptocurrency Surge 100 percent in 2021

Cryptocurrency Surge 100% in 2021: Investor Bill Miller

January 11, 2021
how to become certified financial planner

How to Become a Certified Financial Planner

January 1, 2021
Happy New Year 2021 Wishes, Images, Quotes, SMS, WhatsApp Status

Happy New Year 2021 Wishes, Images, Quotes, SMS, WhatsApp Status

December 31, 2020
Sovereign Gold Bond Scheme (SGB) December 2020: Open on Dec. 28

Sovereign Gold Bond Scheme (SGB) December 2020: Open on Dec. 28

December 25, 2020
Bank Holidays 2021

Bank Holidays 2021: List of National, Govt., & Saturday Bank Holidays in India

December 25, 2020
2021 Honda Passport vs Pilot

Honda Passport vs Pilot 2021 Comparison – Find the Best Model for you

December 24, 2020
Next Post
5 Tips Every Cryptocurrency Investor Must Know

5 Tips Every Cryptocurrency Investor Must Know

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

SEARCH

No Result
View All Result

FOLLOW US

Follow our social media pages and get updates quicker than ever.

Facebook Twitter Youtube Instagram

RECENT POSTS

sbi credit card statement

How to Check SBI Credit Card Statement & Pay Its Bill

January 27, 2021
best writing tools for website

5 Best Writing Tools To Use For Your Website

January 27, 2021
Bigg Boss Kondattam

Bigg Boss Kondattam Season 4 will air on Vijay TV, check the date

January 27, 2021
Master Amazon Prime Release Date

Master OTT Release Date confirmed officially

January 27, 2021
How to send Happy Republic Day Stickers, GIFs On WhatsApp

Happy Republic Day 2021: How to send Happy Republic Day Stickers, GIFs On WhatsApp

January 26, 2021

ABOUT

Founded in 2016, WORLDHAB delivers news from the various niches around the world for the targeted audience. For any advertising queries, contact us anytime.

We got approved in Google news and Bing news in earlier 2016. And since then, we help small businesses to grow their business by improving their website authority.

POPULAR CATEGORIES

  • Business
  • Finance
  • Insurance
  • Bitcoin
  • Entertainment
  • Sports
  • Football
  • Cricket
  • Lifestyle
  • Health
  • Travel
  • Romance
  • Technology
  • Education

FOLLOW

Facebook Twitter Youtube Instagram Pinterest LinkedIn Vimeo

WORLDHAB STATS

  • Monthly Traffic: 50,000+
  • Site Age: 5 Years
  • Google News Approved
  • Bing News Approved
  • Alexa Rank: 912,985
  • Domain Rating: 22
  • URL Rating: 24
  • Domain Authority: 33
  • Page Authority: 38

CONTACT

For Guest posts, Sponsored posts, Advertising enquiries, contact: support@worldhab.com

  • Home
  • About Us
  • Disclaimer
  • Privacy Policy
  • Contact Us

© 2020 WORLDHAB - Premium WordPress theme by VISION.

No Result
View All Result
  • Breaking
    • India
    • World
    • Politics
  • Business
    • Finance
    • Insurance
  • Cryptocurrency
  • Entertainment
  • Sports
    • Football
    • Cricket
    • Basketball
    • Tennis
    • WWE
  • Lifestyle
    • Fashion
    • Food
    • Health
    • Pets
    • Travel
    • Romance
  • Tech
    • Android
    • iOS
    • Games
    • Laptops
    • Mobiles
    • Gadgets
    • Social Media

© 2020 WORLDHAB - Premium WordPress theme by VISION.

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.