A fixed deposit is the simplest form of financial investment. You can create a fixed deposit with a bank or NBFC (Non-Banking Financial Institution) as per your convenience. The rate of interest paid on fixed deposits is higher than the interest paid on saving bank account. You can earn interest on the monthly, quarterly, half-yearly or annual basis as per your requirement. It is also possible to choose a cumulative option in which case the principal and interest will be paid on the maturity date.
Fixed Deposit Interest Rates of Various Banks
|SBI||7 days to 10 years||5.75% to 6.75%|
|ICICI Bank||7 days to 10 years||4% to 7%|
|Axis Bank||7 days to 10 years||3.5% to 8.05%|
|HDFC Bank||7 days to 10 years||3.5% to 7%|
|IDFC Bank||7 days to 731 days||4% to 7.75%|
|Kotak Bank||7 days to 10 years||3.5% to 7.35%|
SBI Bank Deposit Rates
SBI offers 0.5% higher rate of interest than regular deposits for senior citizens.
The following interest rates are applicable with effect from 28th May 2018:
|Period||Interest Rate (Per Annum)|
|7 days to 45 days||5.75|
|46 days to 179 days||6.25|
|180 days to 210 days||6.35|
|211 days to less than 1 year||6.40|
|1 year to less than 2 years||6.40|
|2 years to less than 3 years||6.60|
|3 years to less than 5 years||6.70|
|5 years and up to 10 years||6.75|
SBI is the largest public sector bank in the country. SBI FD Rates will be revised as per the monetary policy announced by the Reserve Bank of India.
SBI will pay a higher rate of interest for staff and pensioners. The interest rate will be 1% above the interest rate applicable to the general public. SBI senior citizen resident Indian pensioner will get the benefit of staff interest rate of additional 1% plus the senior citizen interest rate of additional 0.5%.
The interest rates will be applicable for fresh deposits and renewals of maturing deposits.
|7 days to 14 days||4%|
|15 days to 29 days||4.25%|
|30 days to 45 days||5.5%|
|46 days to 60 days||5.75%|
|61 days to 184 days||6%|
|185 days to 289 days||6.25%|
|290 days to less than 1 year||6.5%|
|1 year to 389 days||6.60%|
|390 days to 2 years||6.75%|
|2 years 1 day up to 5 years||7.00%|
|5 years 1 day up to 10 years||7.00%|
|5 Years Tax saver FD(Max up to Rs. 1.50 lac)||7.00%|
ICICI Bank offers 0.5% additional interest for senior citizen fixed deposit receipts. The interest rates are different for domestic, NRO, and NRE deposits. The interest will also differ based on the amount.
ICICI Bank offers fixed deposits with withdrawal option and without withdrawal option. There will be little higher interest for fixed deposits without withdrawal option.
For NRE deposits, the minimum tenure is 1 year and the maximum tenure is 10 years.
Axis Bank Fixed Deposits
Axis bank offers fixed deposit facility online or offline. The interest rates are based on the tenure and amount. For senior citizens, the bank pays a higher rate of interest at 0.65% above the regular deposits.
|Period||Interest Rate (Per Annum)|
|7 days to 29 days||3.5%|
|30 days to 45 days||5.5%|
|46 days to 6 months||6%|
|Above 6 months and less than 9 months||6.5%|
|Above 9 months and less than 1 year||6.75%|
|1 year less than 1 year 5 days||7.75%|
|1 year 5 days less than 1 year 11 days||8.05%|
|1 year 11 days less than 30 months||7.65%|
|30 months to 10 years||7.5%|
The FD Interest Rates are high for senior citizens. Senior citizens who deposit less than Rs. 1 crore will be paid 0.65% higher interest rate on top of the above interest rates.
The bank implements a different type of interest rates for deposits above 1 crore and less than 5 crores. The interest rates will be revised on regular basis as per the monetary policy of the RBI.
Different Types of Fixed Deposits
There are different types of fixed deposits. Indian residents can choose various kinds of fixed deposits as per their financial needs.
- Standard Fixed Deposits - These are simple fixed deposits and there are no complications in the creation or withdrawal of deposits. You will deposit a fixed sum of money for a predetermined period of time. The rate fixed by the bank will be paid to the customer as per the terms and conditions.
- The standard fixed deposits are secure and you can invest very easily by approaching the bank or by creating an online account.
- Special Fixed Deposits - To earn higher interest rate, you should go for special fixed deposits. It is possible to take loan on fixed deposits. You can take loan to the extent of 90% of the principal. The rate of interest on the loan will be 1% to 2% higher than the interest paid on the fixed deposit.
- Tax-Saver Fixed Deposits - You can opt for fixed deposits to get regular returns or payment after the maturity date. With tax-saving fixed deposits, you will get income tax exemption up to Rs. 1.5 lakh per year under Section 80C. Banks will impose a minimum of 5-year lock-in period to get income tax benefits.
It is not possible to withdraw funds from a tax-saver fixed deposit. However, you can opt for monthly, quarterly, half-yearly or annual interest payment option. The principal amount will be intact and you will get money on regular basis. The income generated by the tax-saver fixed deposit should be added to the annual total income and the tax should be paid as per the income tax slab.
Best Fixed Deposit Rates
RBL Bank offers 7.75% interest on a fixed deposit of one-year duration. Laxmi Vilas Bank offers 7.3% interest on 5-year fixed deposit.
Benefits of Bank Fixed Deposits
- Guaranteed Returns - Unlink mutual funds or stock investment, fixed deposits will deliver guaranteed returns. There is no risk to the capital and the bank or NBFC will pay the interest rate as per the terms and conditions of the deposit. Even though the bank or NBFC incurs loss, the interest and principal should be paid to the customer without fail.
- Liquidity - Fixed deposits offer highest form of liquidity. When you subscribe to general/standard type of fixed deposits, the deposit can be created on any working day and the deposit can be closed before the maturity date.
- Low Penal Charges - If you close the fixed deposit before the maturity date the bank will impose penal charges. The rate of interest for premature withdrawals will be calculated 1% less than the tenure applicable for the deposit. If the rate of interest for one year fixed deposit is 7%, the bank will pay 6% interest for closing the deposit between the 9th month and the 12th If the deposit is closed before 6 months from the deposit date, the rate of interest will 1% less than the interest paid for a 6-month deposit.
- Higher Rate of Interest - The rate of interest paid on fixed deposits will be higher than the savings account. Instead of keeping excess funds in your savings account, you can create a fixed deposit and you will earn higher interest on the principal amount.
- Multiple Fixed Deposits - There is no limit on the number or volume of fixed deposits that you can maintain with banks. You can create more than one fixed deposit in your bank.
- Online Creation and Withdrawal - With the availability of the internet banking facility, you will be able to create fixed deposit online. The deposit can be created instantly in few seconds and the deposit can be closed quickly as per your convenience.
- Regular Returns - Depositors can opt for regular returns from the fixed deposit. The interest earned on deposits will be paid on monthly, quarterly, semi-annually or annually as per the option exercised by the depositor. It is also possible to exercise the cumulative option in which case, the principal plus the interest will be paid on the maturity date.
- Auto-Renewal Option - The fixed deposit can be renewed automatically after the maturity date. If you open a fixed deposit, you can get the endorsement at the bank branch so that the fixed deposit will be renewed for another term automatically. If you had created the fixed deposit online, you can choose an option to renew the deposit automatically after the end of the term.
- Income Tax Benefits - Fixed deposits are safe investment options. You will earn good returns on the principal and you can avail income tax benefits as well. You can invest in tax-saver fixed deposits and get exemption on the principal amount up to Rs. 1.5 lakh per annum under Section 80C.
- No TDS up to Rs. 50,000 - There will not be TDS (Tax Deduction at Source) for senior citizens whose income on fixed deposits is less than Rs. 50,000 per annum. Hence, senior citizens will be able to save more than Rs. 5 lakhs as fixed deposits to meet their regular financial needs.
- Loan Facility on FD - By maintaining a fixed deposit with a bank, you can take loan against the fixed deposit. You can take loan up to 90% of the FD account and the fixed deposit will continue to earn the interest.
- Partial Withdrawal of Fixed Deposits - Some banks like Axis Bank permit customers to go for partial withdrawals. If you deposit Rs. 1 lakh as FD, it is possible to break the deposit. You can break up to Rs. 60,000 and the rest of the amount (Rs. 40,000) will earn interest as FD.
Why Should You Choose Fixed Deposits?
- Liquidity - You should have fixed deposits in your investment portfolio so that there will be great financial freedom. Fixed deposits can be used to fulfill your short or medium-term needs. If you go for tax-saving fixed deposits, you can fulfill your long-term needs.
- No Risk - If you cannot afford to take risk on your investment, fixed deposit is the ideal option. It is possible to set realistic expectations with the fixed deposit. To break the market volatility, you should invest for a long-term. There will be assured returns when you maintain an investment portfolio with a long-term orientation.
- Security - Investor’s account up to Rs. 1 lakh will be guaranteed with the insurance stipulation which is mandatory as per RBI guidelines. There will be risk with other kinds of investments such as mutual funds and shares of a company.
- Loan Option - Fixed deposits offer loan facility. You can avail loan at lowest rate of interest. The rate of interest applicable on fixed deposits is less than the interest on personal loans. Hence, it is a wise option to fulfill your financial needs. You can also improve your credit score by taking loans and repaying them as per the schedule.
- Saving Potential - You will save money for potential future needs by choosing fixed deposits. If you create a fixed deposit instead of keeping in savings account, you will earn higher interest rate and the tendency to spend money will be restricted.
- Higher Interest Rates for Senior Citizens - Most of the banks offer higher interest rates for senior citizens. The interest rate variation will be in between 0.5% and 0.65% than the regular deposits. Hence, it is a plus point for senior citizens to save money as per their current and future needs.
‘Fixed deposits’ will help you save money as per your future needs and there is great flexibility with these deposits. Even though FD interest rates are revised on regular basis, the interest committed by the bank at the time of creation of the deposit will be honored by the bank. With liquidity, loan option, and income tax saving potential, fixed deposits should get space in your investment portfolio.
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