Fixed deposits are reliable savings schemes that offer you an easy way to grow your savings with minimal risks. If you have specific financial goals, bank FD deposits can provide you with a secure and predictable way to achieve them. A key factor that determines the return on your investment is the fixed deposit interest rate.
The fixed deposit rates offered by banks are competitive, thereby helping you earn a substantial return. These interest rates are fixed depending on the tenure of the FD, the deposit amount and whether the depositor is a regular or senior citizen.
Top Bank FD Interest Rates
Banks in India offer exciting interest rates on fixed deposits. Understanding these rates can help you predict the return on your investments. Here are the top bank best fixed deposit rates in India:
| Top Banks | Regular interest rates | Senior citizen interest rate |
|---|---|---|
| State Bank of India | 3.00% - 7.10% | 3.50% - 7.60% |
| HDFC Bank | 3.00% - 7.20% | 3.50% - 7.75% |
| Axis Bank | 3.00% - 7.10% | 3.50% - 7.75% |
| ICICI Bank | 3.00% - 7.10% | 3.50% - 7.65% |
| IDBI Bank | 3.00% - 7.00% | 3.50% - 7.50% |
| Induslnd Bank | 3.50% - 7.50% | 4.25% - 8.25% |
| Punjab National Bank | 3.50% - 7.25% | 4.00% - 7.75% |
| IDFC First Bank | 3.00% - 7.75% | 3.50% - 8.25% |
| Canara Bank | 4.00% - 7.25% | 4.00% - 7.75% |
| Union Bank of India | 3.00% - 7.00% | 3.25% - 7.25% |
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All Bank FD Interest Rates
Invest in the right bank FD deposit by understanding how much interest rate is offered by various banks. Here are the FD rates offered by different banks for FDs under 2 Crores:
| Banks | Regular Interest rates | Senior Interest Rates |
|---|---|---|
| RBL Bank | 3.50% - 8.00% | 4.00% - 8.50% |
| Bank of Baroda | 3.00% - 7.25% | 3.50% - 7.75% |
| Punjab and Sind Bank | 2.80% - 7.40% | 3.30% - 7.90% |
| Unity Small Finance Bank | 4.50% - 9.00% | 4.50% - 9.50% |
| Kotak Mahindra Bank | 2.75% - 7.25% | 3.25% - 7.75% |
| Bank of Maharashtra | 2.75% - 6.50% | 3.25% - 7.00% |
| Yes Bank | 3.25% - 7.75% | 3.75% - 8.25% |
| South Indian Bank | 2.90% - 7.40% | 3.40% - 7.90% |
| Standard Chartered Bank | 2.75% - 7.50% | 2.75% - 8.00% |
| UCO Bank | 2.90% - 6.50% | 3.15% - 7.00% |
| Indian Bank | 2.80% - 7.25% | 3.30% - 7.75% |
| Bank of India | 4.50% - 7.25% | 3.00% - 7.90% |
| Indian Overseas Bank | 4.00% - 7.10% | 4.75% - 7.85% |
| Bandhan Bank | 3.00% - 7.85% | 3.75% - 8.35% |
| RBL Bank | 3.50% - 8.00% | 4.00% - 8.50% |
| Karnataka Bank | 3.50% - 7.25% | 6.30% - 7.65% |
| Karur Vysya Bank | 4.00% - 7.50% | 5.90% - 8.00% |
| Federal Bank | 3.00% - 7.40% | 3.50% - 7.90% |
| HSBC Bank | 2.85% - 7.25% | 3.35% - 7.75% |
| Jammu and Kashmir Bank | 3.50% - 7.50% | 4.00% - 8.00% |
| DBS Bank | 2.50% - 7.50% | 2.50% - 8.00% |
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Factors Affecting Bank FD Rates
Three factors determine Bank FD rates:
- Deposit amount: Banks offer different interest rates for deposit amounts that are less than 1 Crore and bulk amounts that are more than 1 Crore. Usually, they offer lower interest rates on bulk deposits.
- Tenure: The tenure also plays a significant role as different tenures offer different interest rates. Often, FDs with a longer tenure have a higher interest rate than those with shorter tenures.
- Type of depositor: Senior depositors usually get an extra 0.25% or more increase in the interest rates compared to regular depositors.
Fixed Deposit for Senior Citizens
Fixed deposits for senior citizens cater to the unique financial requirements of the elderly. These fixed deposits differ from regular FDs as they usually offer higher interest rates, tax benefits and flexible interest payout options. Providing the elderly and retirees with a secure and rewarding investment opportunity.
The features of FDs for senior citizens include:
- High interest rate: Banks offer higher interest rates for senior citizens compared to regular citizens. Providing them with enhanced returns. The current highest FD interest rate offered by Banks to senior citizens is up to 9.50%.
- Age specific: The FD for seniors is only eligible for those who have crossed the age of 60 years or more.
- Flexible tenure: Bank FD offers flexible tenure options allowing senior citizens to tailor their financial needs according to their goals.
- Interest payout options: Senior citizens can also choose an interest payout that caters to their specific needs.
- Tax benefits: Most bank FDs provide tax benefits under Section 80C of the Income Tax Act,1961. Saving schemes like Senior Citizens Savings Scheme (SCSS) especially offer many tax benefits.
Saving your money in FDs after retirement is advantageous as it provides a secure investment option with guaranteed returns. This ensures that senior citizens will have a reliable source of income in the long run. Moreover, fixed deposits offer capital protection and steady wealth growth with minimal market risks. Making it a great opportunity for senior citizens who would like to preserve their savings. Lastly, the predictability of returns and easy liquidity option makes it ideal for financial planning and access to funds in case of emergencies or urgent expenses.
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Impact of Tax on Fixed Deposit
Tax can impact your fixed deposits, understanding the implications is crucial for you to accurately assess the returns you can get after tax. This can help you make a solid financial plan to achieve your desired goals. Here is how tax impacts FDs:
- Age proof: Aadhaar, Voter ID, Passport.
- Identity proof: Aadhaar, PAN card.
- Address proof: Rental agreement, Ration card, Utility bills.
- Income proof: 6 months bank statement, Form 16, ITR for the last 2 years.
- Experience proof: Driving licence, Registration copy of commercial vehicle owned, Property ownership, Proprietorship declaration, etc.
- Fleet list: List of vehicles currently in ownership along with supporting documents.
Tax Saving FD
Tax saving fixed deposits are specialised fixed deposits that offer stability and strategic financial planning. These fixed deposits have a mandatory lock-in period of 5 years. What is special about a Tax saving Fd is that the principal amount deposited in one qualifies for a deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act, 1961.
Tax Saving Fixed Deposit offers dual benefits of fixed returns and tax savings which is an attractive choice for those who want to secure their savings.
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FD Interest Calculation
Calculating the interest on your fixed deposit is a crucial part of your investment journey. Doing so will assist you in realising your financial goals. You can calculate the interest you can get on your FD by using an online FD calculator or by manually calculating using the formula:
A=P x (1 + rn)n x t
Here, A stands for the maturity amount
P stands for the principal amount.
r stands for the interest rate.
n stands for the tenure in years.
To calculate the potential interest on your bank fixed deposit, you can use the following formula:
CI=P(1+rn x 100)n x t- P
A more convenient method is to use an online FD calculator. Using the calculator will help you get instant and more accurate results. For calculating, all you need to do is visit an online FD calculator, enter the necessary information such as the principal amount, interest rate and tenure. You will then get the results immediately.
Features of Fixed Deposit
Fixed deposits have become a popular investment option because of the stability and assured returns that they offer. The features of fixed deposits have also made them a preferred choice for many. These features are:
- Security: Fixed deposits are one of the safest investment options that provide fund protection with guaranteed returns that are not subject to market fluctuations.
- Assured returns: FDs offer fixed rates for a specific period. Making them highly predictable which allows you to effectively make a financial plan.
- Various tenures: Fixed deposits offer different tenures with different interest rates. This gives you the flexibility to choose a tenure that suits your financial goals and requirements.
- Liquidity options: In case of urgent financial needs, FDs provide the option to liquidate the funds with applicable penalties.
- Nomination facility: Nominating beneficiaries is another feature of FDs, which ensures a smooth transfer of funds in case of the account holder’s untimely demise.
- Tax implication: Although the interest acquired on FD over the tenure is taxable. Some fixed deposits offer tax saving benefits under Section 80C of the Income Tax Act.
- Senior citizen benefits: Senior citizens get higher interest rates with bank FD deposits. This is an attractive option for retirees seeking regular income.
- Auto renewal option: Fixed deposits have an auto renewal option that allows the principal and interest rate to be reinvested for an additional term.
- Flexible deposit amount: FDs require a minimal investment amount, making it highly accessible to a large range of people.
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Important Term Related to Fixed Deposit
- Principal: This is the initial amount that is deposited into the bank FD deposit.
- Rate of interest: This means the rate at which the principal amount earns interest over a period of time.
- Maturity amount: This implies the total amount you get after the maturity period, it includes both the principal and interest acquired.
- Tenure: The tenure is the period by which the fixed deposit is held.
- Compounding: This is a process where the interest earned is added to the principal amount, after which the new interest will be calculated based on the new higher amount.
- Nomination: This is a process of appointing a close relative or friend as a nominee to receive the funds in case of the depositor’s demise.
- Premature withdrawal: This implies the withdrawal of funds before the maturity date which will incur penalty charges.
- Auto-renewal: An option that allows you to reinvest the amount for a similar tenure.
- Senior citizen FD: A special category of fixed deposits that offer higher interest rates than regular citizens.
- Tax saving FD: These are fixed deposits that offer tax benefits under Section 80C of the Income Tax Act which usually has a lock-in period of 5 years.
- Penalty: Penalty implies the charge or reduction in interest payable when the FD is withdrawn before the maturity date.
- Cumulative FD: A fixed deposit where the interest is reinvested and paid along with the principal at the time of maturity.
- Non-cumulative FD: A fixed deposit where the interest is paid in regular intervals such as monthly or annually without being reinvested
How to Choose the Right Fixed Deposit
Choosing the right fixed deposit requires a proper understanding of your financial goals and plans. Understanding what your goals are can help you choose the right bank, bank FD interest rate and tenure. Keeping this in mind, here are some points to consider when choosing the right FD:
- Interest rates: Different banks offer different interest rates. Compare the different rates to see which one can give you the highest returns within the tenure that you are looking for.
- Tenure options: The tenure options come with different interest rates. The shorter the tenure the lower the interest rates and the longer the tenure, the higher the interest rates. Depending on your expectations and financial goals choose a tenure that aligns with your needs.
- Premature withdrawal penalty: Different banks will incur different penalties on premature withdrawal. Choose an FD that balances your need for liquidity with potential penalties.
- Credibility of the bank: Choose a bank that has a strong track record. Check for ratings and the bank’s credibility in the market.
- Comparison tools: Use online tools to compare multiple FD options. These FD online calculators will provide a comprehensive overview of interest rates, tenure and features. Making your choice easier and simpler.
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Frequently Asked Questions
Bank fixed deposit is a secure investment where you can deposit a lump sum of money for a fixed tenure at an interest rate that is predetermined.
A bank FD works in the following ways; choose a bank, select the FD type and tenure, deposit your money and you will get an annual interest payout until the maturity date. An FD differs from other investments as it is low-risk, has moderate returns, with high liquidity and transparency.
The key features of a Bank FD is that it offers fixed interest rates, has varied tenures, principal protection, interest payout flexibility, is low-risk, and has potential tax benefits.
The minimum investment for a bank fixed deposit usually ranges from 1000 to 5000. However, there is no maximum investment limit for fixed deposits.
The maturity period offered by most banks is 7 days to 10 years.
The bank FD interest rate is determined by a number of factors, these are; the inflation rate, the bank’s cost of funds, bank’s risk appetite, competition and more.
Yes, you can prematurely withdraw funds from a Bank fixed deposit. Yes, there are penalties for early withdrawal.
The interest rates on bank fixed deposits are fixed.
Yes, the interest earned on bank FDs is taxable.
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