To anyone looking for somewhere to put their money, an FD or fixed deposit is an appropriate investment option. It is possible to make good interest on a fixed deposit and earn better returns over time. The highest FD interest rates vary from bank to bank, together with the amount deposited and the term chosen by the depositor.
When the maturity date of the FD account is reached, the depositor receives back the principal amount along with the interest accrued. Normally, the FD holds the post for a maximum duration of 10 years. This article aims to find out the FD interest rates in India and compare them.
What is a Fixed Deposit or FD?
An FD or fixed deposit (also known as term deposit) is a fixed period set aside for your investment. This is an investment opportunity where an individual invests the money earned over a specific time and earns interest on it. It is a good option among investors due to the Highest FD Interest Rates in India that guarantee capital safety and income guarantee.
For people who are new to investing or are a bit cautious, FD is a great option for them to start. This type of investment entails low risk and little need to be watching the market. It is helping them when it comes to reaching their financial goals and savings to retire or have money for emergencies. So, as you open an FD account, make sure you know what is the interest rate of FD offered by banks as the rate will determine how much you earn.
Features of a Fixed Deposit
The most common features that all fixed deposits share are given below. Apart from the FD interest rates and the bank that you choose, this information is also useful.
Low Deposits – You can start an FD with as low as Rs. 100. This is perfect for new, first-time investors. Check across different banks what is the minimum amount you can invest.
Fixed Time Period – The FD is valid for a fixed tenure during which interest accrues on the principal amount. You can choose a tenure anywhere between 7 days up to 10 years.
Fixed FD Interest Rates – A bank’s fixed deposit interest rate remains the same until the FD matures or is renewed by the depositor. Many banks even offer the floating FD scheme in which the interest rate depends on external features. In such cases, the rate of interest on fixed deposits changes with movement in these features.
Different Payout Options: You chose either the monthly, yearly, half-yearly, or quarterly payment option from the bank. There is a second option, which is called a cumulative scheme, in which you get interest not only on your capital but also on the interest you have already earned. You can benefit from exponential growth that way.
Early Withdrawal – It is possible to make a premature or early withdrawal of funds from your FD account. However, you will have to pay penalties or charges for this.
Loan Against the FD – You can use your FD to receive a loan against it. You still keep earning interest from your fixed deposit.
Latest FD Interest Rates Comparison
Do you want to know the latest FD rates before opening your account? Next, we will discuss the FD rates in India on offer by the top public and private sector banks.
Private Sector Banks –
| Bank | 1-Year Rate | 3-Year Rate | 5-Year Rate |
|---|---|---|---|
| Axis Bank | 6.7% | 7.1% | 7% |
| Federal Bank | 6.8% | 7% | 6.6% |
| HDFC Bank | 6.6% | 7% | 7% |
| ICICI Bank | 6.7% | 7% | 7% |
| IDBI Bank | 6.8% | 6.5% | 6.5% |
| Kotak Mahindra Bank | 7.1% | 7% | 6.2% |
| IndusInd Bank | 7.75% | 7.25% | 7.25% |
Public Sector Banks –
| Bank | 1-Year Rate | 3-Year Rate | 5-Year Rate |
| State Bank of India | 6.8% | 6.75% | 6.5% |
| Bank of Baroda | 6.85% | 7.25% | 6.5% |
| Central Bank of India | 6.75% | 6.5% | 6.25% |
| Indian Overseas Bank | 6.9% | 6.5% | 6.5% |
| Punjab National Bank | 6.75% | 7% | 6.5% |
| Union Bank of India | 6.75% | 6.5% | 6.5% |
Small Finance Banks –
| Bank | 1-Year Rate | 3-Year Rate | 5-Year Rate |
| AU Small Finance Bank | 6.75% | 7.5% | 7.25% |
| Capital Small Finance Bank | 7.5% | 7.15% | 7.1% |
| Equitas Small Finance Bank | 8.5% | 8.2% | 7.25% |
| Jana Small Finance Bank | 8.5% | 7.25% | 7.25% |
| Fincare Small Finance Bank | 7.65% | 8.11% | 8% |
FD Interest Rates – Special Features
The following are some features of the latest FD rates you should know –
- FDs have a higher rate of interest than the standard savings account opened in a bank.
- Any individual Indian, even HUFs and minors, may open an FD account.
- On the day of maturity, the depositor can select 2 nominees who would be entitled to get the maturity amount after producing a death certificate in case the depositor dies.
- The withdrawal from a fixed deposit account before its maturity period is not permitted under any circumstances. You are charged a penalty for such withdrawals used for an emergency.
- The customer can easily connect his savings account with the FD account provided by the banks through the Sweep-in service.
- You can apply for a loan from any bank against your FD, which provides you security. Get up to 80-90% of the amount in your FD.
FD Interest Rates for Senior Citizens
Many banks pay higher interest rates for fixed deposits made by senior citizens. An applicant must provide a photocopy of his/her identification card. A customer’s age must exceed 60 when opening an FD account, and the period ranges from 7 days to 10 years.
Senior citizen accounts offered by banks net a 0.25 to 0.75% higher interest than the regular FD rate. Essentially, it is just as you do with a normal FD. It is possible to take the loan against it, and you will have to pay a penalty in case you withdraw the funds prematurely.
FD Interest Rates – Important Terms to Know
Timely Closure – This refers to closing your FD account when it matures and the tenure ends. The bank will pay you the interest collected along with the principal amount deposited.
Breaking an FD Account – One breaks an FD account by withdrawing the entire amount before the account reaches maturity. It is not allowed by banks, and you have to pay a penalty for this. Also, the rate of interest is low in case of breaking an FD account.
Partial Withdrawal – This is when the depositor withdraws some money from the FD account for an emergency. The remaining amount earns the original bank’s fixed deposit interest rate.
Conclusion
A fixed deposit is the best option for people who are new to investing money and want a safe, viable option. Make sure to check the rate of interest, tenure, and penalty on early withdrawal before starting an FD. We checked out the latest FD interest rates in India offered by the most popular banks.
You can invest money for shorter terms and reinvest when the interest rates go up for more profits. Make sure to set up your budget properly before you make a deposit, and go for an amount that won’t affect your everyday finances. Find out different bank fixed deposit interest rates and choose the most suitable one for you out of the provided options. Visit Wint Wealth for an easy comparison of FD rates.
