Fixed Deposit Rates 2024

Posted by  Fintra , updated 2023-12-06

Fixed deposits commonly known as FD is an investment/savings account and a tool offered by banks to earn higher interest rates than a regular savings account, till the FD matures. It is also referred to as time deposit and term deposit many times. The interest rates of FD are comparatively risk-free along with offering guaranteed returns. Moreover, the funds invested into this scheme is paid just once at the time of opening the fixed deposit account for a fixed tenure.  

The investor has to just deposit the specific amount for a fixed tenure, and against it, the bank will offer interests, depending on the FD tenure and the deposited amount. The FD Interest rates are generally calculated on the principal amount at the end of the tenure that ranges from 7 days to 10 years, which can be requested as per the requirement. One thing to be taken care of is that you cannot withdraw money before maturity, unlike a savings deposit without paying a penalty. For such accounts, you may or may not require to open a separate account because mostly the maturity amount will get deposited in the bank’s savings account after the maturity date.  

FDs are indeed one of the conventional and smartest means to secure your funds and enable them to grow. This encourages you to develop the habit of saving and enables you to earn the best interest rates on them. Thus, before opening a new fixed deposit or renewing an existing one, it is vital to compare the latest fixed deposit rates among the leading banks in India. In this blog, Fintra will highlight some of the latest fixed deposit rates for the year 2024 and give in-depth information about fixed deposits by talking about the following topics:

1. Current Fixed Deposit Rates Offered By Top Banks In India
2. The Advantages and Disadvantages of Fixed Deposits
3. What you must be looking into before buying an FD?
4. Types of Fixed Deposits in India
5. Why does FD interest rates keep changing?
6. Fixed Deposit Interest Rates Calculator 

Current Fixed Deposit Rates Offered By Top Banks In India

The FD rates offered by different banks vary according to the duration of the time and different bank policies such as  SBI fixed deposit interest rates vary from 2.90% to 3.40% over a period of 7 days – 10 years. The bank interest rates being offered by DBS Bank, ICICI Bank, IDFC Bank, Kotak Mahindra, and Yes Bank are among the best for opening a fixed deposit.

Here’s a table showing the best interest rates offered by some of the top banks in India for below Rs. 2 Crore: 

 *The fixed deposit rates are subject to change without any prior notice

The Advantages and Disadvantages of Fixed Deposits

It's very easy and simple to open a fixed deposit and it can be opened online and offline. However, it's vital to understand if investing in a fixed deposit will be a wise option or not. Hence, Fintra will guide you through the advantages and disadvantages of a fixed deposit account to enhance your knowledge and enable you to make a wise decision:

Advantages of Fixed deposits

• Offers a good return and involves no risk at all therefore completely secure.
• In a fixed deposit, there is an assured rate of return. Once investment of funds in a fixed deposit account is made, one can be assured to receive the mentioned rate of return. The banks usually publish their fixed deposit rate of interest on their official website and in their branches which makes it easier for customers to determine how much return they will receive. Along with this, banks even publish fixed deposit interest calculator on their websites to assist their customers to calculate the interest they will get on investing a particular sum of money for a particular period of time.
• The value of deposits can be easily used to avail loans against the same. A loan of up to 90% to 95% of your deposit is easily sanctioned.
• No limit on the amount deposited.
• FDs provide higher interest than a normal saving account. Their rates vary between 7% to 8%. Do bear in mind that the interest obtained on FD also varies with its tenure, hence, a long-term FD will accrue better interest gain. One can check the fixed deposit interest rate comparison charts online on the various banks' website to know which bank is offering the highest returns.
• Since banks aren't mandated to deduct tax on interest until they cross Rs. 10,000, they will not deduct any tax unless the total interest earned by an investor on various fixed deposits totals Rs. 10,000. The option provides comfort to the small deposit investors.
• At the time of opening an FD account and making a deposit, the original monetary amount is exempt from taxation, under Section 80C of the Income Tax Act. Hence, for this reason, FDs are widely used as a tax saving option by salaried individuals, workers, and business persons. The section allows an exemption of up to Rs 1.5 lakhs towards an FD deposit. Fintra advises if you desire to save taxes, then one must deposit the FD for a minimum duration of 5 years. 
• The fixed deposit tenure is flexible and it depends on the deposit holder. Every bank has its minimum tenure rules, but the final decision is made by the deposit holder. The holder can also at times choose whether to redeem its fixed deposit or extend it for the same period of time.
• Liquidating a fixed deposit is relatively easy. If FDs have been booked online, then they can be liquidated online via net banking, too. Otherwise, various bank branches do keep a form to liquidate the FD.
• Few banks provide an FD scheme that allows partial withdrawals. The remaining balance in the FD account after a withdrawal does get the same interest. Hence, FDs are known to be more lucrative and in times of need and crisis, they may be used to withdraw money. 
• FDs are available in all of the public and private sector banks in India, and one open FD via internet banking as well. In fact, it's not required to visit the bank for opening FD if the KYC or "Know Your Customer" formalities has already been done at the bank. 
• There's an option of renewing FDs automatically via internet banking.  
• Any number of FDs at a bank or in multiple banks can be opened.
• Investments made as FDs are secured as the market fluctuation doesn't affect the interest rates, as in the case of Mutual Funds, and other market related financial schemes. Moreover, interest rates for an FD scheme remain fixed during a given time period, until it reaches the maturity period. 
• The 'Lock In Period' of FD ensures that the deposited amount won't be withdrawn or used, and you can gain interest. 
• Senior Citizens will get even better fixed deposit interest rates. The interest rates might vary depending on the selected bank, and on the tenure of the FD. At times it can be as high as 10%. Hence, senior citizens will gain larger income through the deposits.
• Although FDs can be made for a period of a week, it does offer tenure of up to 20 years. 
• There's an option of opening an FD account as a single or joint, and any of the account holders can make a deposit, or withdraw funds from the account. 
• Members belonging to Hindu family can team up and together form a HUF or Hindu Undivided Family, to open a Fixed Deposit. Do note that HUF gets taxed separately, from the individual members of the family, thus this enables a family to save more on taxes by opening the HUF FD account. 
• Even NRIs can open a fixed deposit account and invest in it by making deposits as INR, or in any other foreign currency. Banks have designed customized FD plans for the NRIs, and a few of them are non-taxable.
• FD accounts are transferable, they can be transferred from one bank branch to another.
• FDs are open to individuals as well as to private companies, public companies, partnership firms, trust, societies, HUFS, NRIs, and others.
• FD depositors can even receive the interest, without the TDS (Tax Deducted At Source) reduced from it. To avail this facility the depositor has to fill the form 15-H and submit it to its bank where it holds an FD account. Do note that this provision may not available if the gains exceed Rs. 50,000. 

Disadvantages of Fixed Deposits

• Since Fixed Deposit is less risky so the returns are lower compared to other investment options such as Mutual Funds, Bonds, etc.
• Your money is locked for a fixed tenure with a bank. This means it is not easy to withdraw at a short notice. There is a penalty if you withdraw before the agreed duration.
• There is no tax benefit in this investment, unlike Mutual Funds, National Savings Certificate (NSC), etc.
• The interest rates don't move in coordination with inflation, this means in at times, the investor may earn less than the inflation rate.
• Since the rate of interest on a fixed deposit remains fixed throughout the entire tenure of the fixed deposit, if at all the rates increase, banks won't pay additional interest to the deposit holder.
• All of the interest gained on fixed deposits are entirely taxed. This income falls under “Income From The Other Sources" when you file the ITR to Income Tax Returns. Some other financial instruments that do provide the benefit of tax-free savings are PPF and government bonds.
• The interests obtained from an FD are also charged with TDS. However, depositors do have the option of opting out of TDS and pay the interest at maturity. The form 26 AS that is linked to the depositor's PAN card displays all the TDS deductions made towards the FD. Do bear in mind that if you don't have an income of more than Rs. 2.5 lakhs a year, then TDS won't be deducted from the FD interest. Hence, inform your bank about your low income, in the case of a housewife, and other low-earning people, by submitting the form 15 G and From 15 H at your bank branch.
• Although FDs may offer higher interest rates, there are other investment tools such as mutual funds that offer returns that can be more than 20% or 30%. 

What you must be looking into before buying an FD?

Following are certain things one must know before investing in an FD account:

• FD Account Opening – You can open a fixed deposit account with your bank where you already have a savings account. Few banks even allow you to open this type of account even if you do not have a savings account. Simply go through the Know-Your-Customer (KYC) process to open a bank FD account without a savings account.

• FD Minimum Deposit Amount – Every bank has its own terms and conditions, they even have varied minimum and maximum deposit limits. Hence, Fintra advices to check with all the banks on your list before opening FD account and pick one that suits your pockets.

• FD Interest Rates – The one with a higher interest rate in a specified period is chosen.
• FD Tenure – The amount of period you can invest in should be the least and in that, you must be getting the highest rate of interest. Fixed deposits are usually done for a specified duration; therefore, it is vital to carefully check the tenure. Tenures can range between 1 year and 10 years and some FDs do offer tenures for a period of 7 days. Moreover, do note that premature closure/withdrawals of fixed deposit will may call for a penalty which will reduce the total FD interest/deposit rate. Hence, the minimum and maximum tenure of a fixed deposit vary from one bank to another. Depending on your financial goals and financial requirement, select the tenure for your FD and invest accordingly.
• FD Rates and Payouts - FD interest rate depends on the period for which you are investing in an FD and it may also vary from one bank to another for FDs for the same tenure. For your information, FD interest rates on Senior citizens’ FDs is higher than the General FD interest rates. Do bear in mind that there are two types of payouts in fixed deposit schemes, cumulative and non-cumulative. Depending on each one's requirement it can choose any of them. Those can opt for a non-cumulative fixed deposit if they are looking for a regular source of income on a monthly/quarterly/half-yearly/annual basis. If you desire to invest in a non-cumulative FD, then the interest gets credited into your account at the pay-out interval which you have opted for. One may choose the payout on a monthly/quarterly/half-yearly and on an annual basis as offered by the bank. Those who are looking to save for a long-term and obtain returns on maturity on the principle and accumulated interest can opt for the cumulative fixed deposit. In this case, the total interest amount which is accrued is re-invested and paid to you along with the principal amount at the time of maturity.
• Liquidity – FD schemes that offer premature or partial withdrawal with the least penalty are better.
• Loan against fixed deposit or overdraft – Some banks offer loans to customers at an interest rate 1-2 % higher than FD rate and FD acts as collateral.
• FDs Tax Exemption Benefits - The interest received on your FD is entirely taxable as per your Income Tax slabs. In a financial year, banks will deduct TDS if the interest earned is more than Rs. 10,000 as per the Income-tax laws. Hence, to ensure TDS is not deducted, simply submit Form 15G or Form 15H to your bank.
• FDs Nomination Facility - It's better to make someone a nominee if you are the sole depositor because if anything happens to the FD Account holder, then the nominee has the rights to claim the maturity amount along with the interest earned.
• FD Automatic Renewal Facility - Do check with banks you intend to open an FD account if they have the facility to renew the FD automatically every year until the maturity date until any specific instructions are given. One can choose the option of automatic renewal of FD or opt-out of it by mentioning the choice in the FD form. If you forgot to mention it you can then visit the bank branch and inform them to credit the amount in your bank savings account.
• FD Automatic Renewal Facility - Do check with banks you intend to open an FD account if they have the facility to renew the FD automatically every year until the maturity date until any specific instructions are given. One can choose the option of automatic renewal of FD or opt-out of it by mentioning the choice in the FD form. If you forgot to mention it you can then visit the bank branch and inform them to credit the amount in your bank savings account.

You can refer to the above guidelines if you're desiring to open an FD account or even if you already have one. These guidelines will ensure that your FD account is serving the main purpose for which you have opened the account, be it for long-term financial goals or create savings.

Types of Fixed Deposits in India

Various types of FD schemes vary from tenure, interest rates, and the age of the depositor. Following is the list of the various types of Fixed Deposit available in India:

• Normal Fixed Deposit: These FD schemes are the traditional ones offered by the banks. These don't require the depositor to open a separate account. The tenure under these schemes can range from 7 days to 10 years, and the interest rates accrued under these fixed deposits can vary from 4% to 7.50%, which is higher than the normal savings account.
• Tax Saving FD: These provide tax exemption on the principal amount of up to Rs. 1.5 lakhs in a year. It has a fixed lock-in period of 5 years and within this period it's not allowed to withdraw the funds. One can deposit a lump sum amount at the time of opening the account.
• Flexible Fixed Deposit: Various banks in India do offer special kind of deposits known as flexible fixed deposits. These deposits are flexible and consist of a combination of both, a demand deposit and a fixed deposit. In this scheme, a depositor can enjoy the benefits of liquidity along with gaining high returns of fixed deposit at the same time.
• Senior Citizen FD: These FD schemes are only applicable to individuals who are above 60 years. Senior citizens get a higher FD rate of interest that can range from 0.25% to 0.65% higher than the existing rate. Tenures of these schemes are flexible.
• Cumulative Fixed Deposit: Under these schemes, there are no fixed interest rates. This type of deposit assists you to grow your corpus substantially because the interest rates compounding takes place quarterly or yearly and are paid at the time of maturity. 
• Non- cumulative Fixed Deposit: Such types of schemes are suited for the retired individuals or pensioners. The interest rates get paid out either monthly, quarterly, half-yearly or annually, as per the depositor's choice. This scheme is known to be a good source of income post-retirement. 

Why does FD interest rates keep changing?

Fixed Deposit interest rate is a portion of the state of the economy, resulting in the monetary policy adopted by the RBI. The factors that lead to an increase or decrease in fixed deposit rates are as following:

As investors expect a positive real rate of return, Fixed Deposit rates are linked to the rates of inflation  

1. Since an adequate liquidity scenario won't compel borrowers for aggressive borrowing rate, the case is the opposite during a tight liquidity position 
2. The demand and supply situations for credit also causes the changes in fixed deposit rates
3. It's the anticipation of the changes in financial policy or cut in lending rates
4. Borrowers own fund costs, falling call rates, credit demand, etc. signify fluctuations in fixed deposit rates

Fixed Deposit Interest Rates Calculator 

Fintra's online FD calculator is a convenient and user-friendly financial tool. The fixed deposit interest rate calculator is used in a matter of less than a second! Using the FD interest rates calculator, you can immediately calculate the highest fixed deposit rates you will obtain on your deposit. Alternatively, you can use the following formula:

A = P * (1+r/n) ^ n * t I=A-P

P = Principal Amount A = Maturity Value

r = Interest Rate

n = Frequency of compound interest t = Tenure

I = Earned interest