Banks cut interest rates on fixed deposits

According to the Business Daily, interest on fixed deposits dropped to an eight-year low on bankers’ reduced appetite for savings following a slowdown in demand for loans.

The pandemic has caused banks to become risk-averse to avoid an increase in their bad loans and this has slowed down lending to the private sector.

As a result, banks demand for cash has reduced causing them to offer lower deposit and savers rate.

Banks prefer not to keep deposits that they cannot lend out.

What does this mean for you

If you keep money in a fixed deposit or savings account hoping to grow it with interests, then you may need to look at other options that will give better returns.

One option to consider is the money market fund which has a higher return.

Make sure to consult your financial advisor before making any investment decisions.

Here is the full article on Business daily