Open any newspaper today and you are likely to be bombarded with bank advertisements encouraging you to invest in their fixed deposits (FDs). Each bank is trying to out-do the other by offering very lucrative interest rates.
This competition is definitely beneficial for investors. However, in their anxiety to appear superior, some banks are resorting to ads that border on being unethical. The level of financial literacy in India is still low. And these ads are trying to exploit this weakness of an average investor. The unfortunate part of this whole story is that these are not some unknown banks. Rather, they are amongst the major ones.
Let us look at one such example. The below table provides information on the interest rates provided by some banks on their FDs—as mentioned in their ads in newspaper.
FD rates & how annualised yield is calculated