Company fixed deposits Vs Bank fixed deposits

Company fixed deposits generally tend to give more interest than the bank fixed deposits. There are many reasons for this. Here are some of them.

Interest rates work lower for companies from public deposits

Generally, this means that the interest rate paid by companies on fixed deposits for companies could be lower than what they pay to banks. If banks pay an interest rate of 11.50 per cent to the bank, they could still raise money from individuals by way of company deposits at rates much lower than that.

It is hard for an unrated company to raise money from banks

It is generally hard for an unrated company to raise money from banks. They could therefore offer a higher rates of interest for company fixed deposits.

Less security in company fixed deposits

The company deposits are generally not as secure as banks. As a result, they have to offer a higher interest rate to attract. This is why company fixed deposits offer higher interest compared to banks which are much safer.

When you are looking for companies to deposit your money, always go for companies which have AAA rating. This is because company deposits are not very secure. If the company were to go bankrupt, you could lose your deposit.

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