FD Interest Rates
Introduction
Investing in fixed deposits is one of the safest ways to grow your savings while earning a decent interest on your investment. Banks offer competitive FD interest rates, enabling depositors to achieve good returns over a predetermined tenure. When opening a fixed deposit account, the depositor makes a one-time investment, and the interest earned is based on the bank, the amount deposited, and the selected tenure.
At the end of the FD tenure, the interest accumulated is added to the principal, and the full amount is returned to the depositor. FD tenures typically range from 7 days to 10 years, providing flexibility based on your financial goals. Below, we have highlighted some banks that offer competitive FD interest rates.
Factors Influencing FD Interest Rates Calculator
- Deposit Amount: Banks generally offer lower interest rates on bulk deposits over ₹1 crore, while deposits below ₹1 crore often come with higher rates. For example, DHFL Bank offers interest rates of up to 9.25% on certain FDs. Interest rates are influenced by various factors, such as changes in the RBI’s monetary policies, economic conditions, credit demand, and bank liquidity. The amount deposited, the chosen tenure, and the depositor type all play a role in determining the FD rates.
- Tenure of the Deposit: FDs with shorter tenures usually have lower interest rates, while longer tenures yield higher returns. For instance, Canara Bank offers a 5.25% interest rate on a 1-year FD, while a 5-year FD earns 5.30%.
- Type of Depositor: Senior citizens often receive higher FD interest rates. Currently, most banks offer rates between 3.50% and 9.25% for senior citizen FDs, depending on the deposit amount and tenure.
Special Features of Bank FD Interest Rates
- Fixed deposits typically offer higher interest rates compared to regular savings accounts.
- Indian residents, including minors and HUFs, can open an FD account.
- You can appoint up to two nominees eligible to claim the FD amount in the event of the account holder's demise, upon submission of valid proof.
- Premature withdrawals are generally not allowed, but some banks allow withdrawal with a penalty for emergencies.
- Banks offer a Sweep-in facility, allowing excess funds from your savings account to automatically transfer to your FD account, earning higher FD interest rates.
- Most banks provide loan options against FDs, allowing you to borrow up to 75%-95% of your FD amount. The interest rate for loans is usually 1% to 1.5% higher than the FD rate.
FD Interest Rates in India 2024 – Regular & Senior Citizen Rates
Banks usually offer slightly higher interest rates to senior citizens compared to regular depositors. Senior citizens, aged 60 or older, can open an FD account and benefit from higher rates, with tenures ranging from 7 days to 10 years. The FD rates for senior citizens typically range from 0.25% to 0.75% higher than standard rates, with some banks offering the highest fixed deposit interest rates for senior citizens. Similar to regular FDs, loans can be taken against senior citizen FDs, and penalties may apply for premature withdrawals..
Key Terms Related to Fixed Deposit Interest Rates
- Timely Closure: Refers to closing the FD account at maturity, where the principal and interest are paid back.
- Breaking FD Account: This occurs when the depositor withdraws the FD amount before maturity, often subject to a penalty. Some banks, like Yes Bank and Bank of Maharashtra, may waive the penalty in case of an emergency.
- Partial Withdrawal: This allows depositors to withdraw a portion of the FD amount while the remaining balance continues to earn interest at the original rate. Typically, banks levy a penalty for partial withdrawals.
FD Interest Rate Calculator
To estimate how much interest your FD will earn, you can use an FD calculator available online. This tool helps calculate the maturity amount and total interest based on the principal amount, interest rate, and tenure. You can also use the following formula for manual calculation:
A=P×(1+nr)n×t
Where:
- A = Maturity amount
- P = Principal amount
- r = Interest rate
- t = Tenure
- n = Frequency of compounding
- I = Interest earned (A – P)
Taxation on FD Interest Rates
- The interest earned on FDs is taxable under "Income from Other Sources."
- No TDS is deducted if the interest earned is below ₹40,000 annually.
- To avoid TDS, you can submit Form 15G (for regular citizens) or Form 15H (for senior citizens) at the start of the financial year.
Tax-Saving FDs
Tax-saving fixed deposits allow you to claim deductions of up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. Some key features of tax-saving FDs include:
- A minimum lock-in period of 5 years.
- Premature withdrawals and partial withdrawals are not allowed.
- Loans against tax-saving FDs are not permitted.
Flexi Fixed Deposit
Flexi FDs allow you to link your fixed deposit account to a savings account. This feature helps you automatically transfer surplus funds from your savings account to the FD, ensuring better returns.
Interest Rated
- FD Interest Rates
- Introduction
- Factors Influencing FD Interest Rates
- Special Features of Bank FD Interest Rates
- FD Interest Rates in India 2024 – Regular & Senior Citizen Rates
- Key Terms Related to Fixed Deposit Interest Rates
- FD Interest Rate Calculator
- Taxation on FD Interest Rates
- Tax-Saving FDs
- Flexi Fixed Deposit
Fixed Deposit
- Fixed Deposit
- Introduction
- What is Fixed Deposit?
- Who offers FDs?
- Types of Fixed Deposits
- Current FD Interest Rates in India
- Eligibility Criteria for FDs
- Documents Required
- Lock-In Period for Fixed Deposits
- Benefits of Fixed Deposits
- Limitations of Fixed Deposits
- Loan against FD
- Who should invest in FDs?
- Taxation on FD Interest
Blog
Daily Insights from NiftyTrader
Trading and Investment Terminology