Special FD Interest Rates | Fixed Deposits - Tenures

Banks offer higher interest rates for odd tenures to align with their lending cycle and manage their assets and liabilities effectively. These unique periods are designed to match the bank's specific loan demands within a given time frame. For instance, if the bank requires more two-year loans, it may introduce an 800-day deposit option. Essentially, by extending the tenure of certain fixed deposits, banks ensure they have sufficient funds to provide loans. This strategy helps them maintain a balance between loan offerings and available capital.

However, before investing in an odd-tenure FD, it's important to consider some factors. While these FDs might offer slightly higher returns than traditional FDs, many of them are non-callable. This means that you won't have the option for premature withdrawal with a penalty, unlike with traditional fixed deposits. To optimize returns from deposits, experts suggest diversifying your FD investments between special tenures and regular tenures. Creating a combination of different deposit tenures can help reduce reinvestment risk, which is beneficial for investors seeking stable returns.

Source: [Economic Times Article](https://economictimes.indiatimes.com/...)

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