Banks love to put the FD rate in big bold numbers on a banner outside the branch. Those numbers matter, but they're not the whole story.
Before you lock money away, here's what I'd compare.
The fine print that matters
- Term: 3 months, 1 year, 5 years? Match it to when you'll actually need the money.
- How interest is paid: monthly, quarterly or at maturity? Is it added to the deposit or paid to your savings account?
- Fixed or floating: can the bank change the rate during the term?
- Breaking it early: what penalty or reduced rate applies if you withdraw before maturity?
- At maturity: does it auto-renew? At what rate?
Rates move a lot
In the last few years we've seen FD rates in Nepal swing from double digits down to much lower levels as liquidity changed. A rate you see today might be very different in six months. That's a reason to think about the term carefully, not to chase whoever is highest this week.
Don't forget tax and inflation
Tax is deducted on interest before you receive it. And if inflation is close to (or above) your after-tax rate, your money isn't really growing; it's just keeping pace, or falling behind.
Is it protected?
Deposits at licensed banks and financial institutions are covered up to a limit by the Deposit and Credit Guarantee Fund. Check the current limit and which institutions are covered on the official website. Cooperatives are a different system, and that matters.
Last thing: no real bank will call you asking for your OTP to "process your FD." Hang up.
General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.
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