Interest Rates-III

Let me continue the debate on the floating rate interest rates. If the rate of interest on my borrowing done years ago increases then by same logic the rate of interest on the Fixed Deposit that I have with the bank should also increase. Right ? Wrong. Not only the rate of interest on my fixed deposit remains the same as it was at the time of opening of the Fixed Deposit, if I close the FD before its maturity date I have to pay a penalty to the bank for closing my FD ahead of time.

If I want to swap this low rate FD with a high rate FD with the same bank I still have to pay a penalty to the bank. So while bank has the right to increase the rate of interest on my loans, if I try to do the same I am asked to pay a penalty or I am forced to keep the same low rate of interest. I guess the increase in the interest rate scenario banks are the ones who keep on making money either way.
Considering this that the bank is going to win in either case and I have no means to beat  the bank I decided to join my bank. It was fairly easy to join my bank and become a banker myself, I bought shares in my bank listed on the Bombay Stock Exchange. Hopefully some of the interest the bank is charging me will come back to me in form of dividend and capital gains.
Like they say if you can't beat them join them.

Thanks for reading.

Other articles in this series:
http://moneyandus.blogspot.com/2011/05/interest-rates-ii.html

http://moneyandus.blogspot.com/2011/05/interest-rate.html