which Fixed Deposits: ICICI or IDBI?

Question

Currently ICICI bank is offering interest at 8% p.a. for 400 days on fixed deposites while IDBI bank is offering 8.25% p.a. for 500 days.

is IDBI is better than ICICI since it is giving 0.25% extra with 100 days more.

Answer 1

IDBI is better if you believe the rate interest stays about the same or decline. Then you will benefit from locking in a higher rate for longer period of time.

Comparing apple to apple,
To achieve the same rate of returns for the 500 days @ 8.25% you will have to do 400 days @ 8% plus 100 days @ 9.03%.
It is very unlikely that any bank will give 9% for a 100-day deposit.

In a somewhat unlikely even (yet more likely than the 100 days @ 9%), say that the 500-day rate become 10% next year, you might rather be able to take the money out sooner to take advantage of the 10% rate.

Answer 2

given the rates, ICICI is better. because, after 400 days, you can get the money back with 8% interest and then invest it in a 100 days deposit and earn more...

Answer 3

Go for PPF instead.