Invest in Fixed Deposit to Grow your Savings at Best FD Interest Rates from Banks
Fixed Deposit (FD) is an investment of specific amount for the fixed period of time. It is a financial instrument provided by the banks and other financial institutions that yields the assured returns at minimal or no risk. The returns on these deposits are comparatively higher than that on a regular savings account. The amount deposited in these accounts are locked-in for the fixed period of time and are paid back along with interest accrued. Investment in the fixed deposit is the best option for those who want to make a lump sum investment and receive regular income at specified intervals.
Fixed Deposit Features
- The deposit account is opened with a lump sum amount
- Money is deposited for the fixed period of time ranging from 7 days to 10 years
- The amount deposited cannot be withdrawn before the maturity date
- In case of emergency partial or complete withdrawal is permitted at penal rates
- Interest on deposits is payable at monthly, quarterly and yearly intervals
- Senior Citizens can avail the benefit of additional interest
- Availability of loan against fixed deposits
Fixed Deposit Interest Rates 2023
The interest rate on fixed deposits depends on factors like the period of investment, amount of investment and category of the individual. Some banks provide an extra interest over and above the regular rate of interest to the senior citizens. The rate of interest of some banks are given below:
Top 10 Banks FD Interest Rates (Including Senior Citizens)
| Bank Name | Tenure | FD Interest Rate (p.a.) |
|---|---|---|
| SBI | 7 days - 10 years | 2.90% - 6.20% |
| HDFC Bank | 7 days - 10 years | 2.50% - 6.25% |
| Axis Bank | 7 days - 10 years | 2.50% - 6.05% |
| Bank of Baroda | 7 days - 10 years | 2.80% - 5.75% |
| ICICI Bank | 7 days - 10 years | 2.50% - 4.25% |
| Punjab National Bank | 7 days - 10 years | 3.00% - 5.80% |
| IDBI Bank | 15 days - 20 years | 2.90% - 5.60% |
| Canara Bank | 7 days - 10 years | 2.95% - 6.00% |
| RBL Bank | 7 days - 10 years | 3.25% - 7.25% |
| Yes Bank | 7 days - 10 years | 3.50% - 7.50% |
| PNB Housing Finance | Upto 10 years | 5.74%-9.38% |
| DCB Bank | 7 days - 10 years | 4.75%-7.45% |
| IndusInd Bank | 7 days - 10 years | 3.00%-8.30% |
Fixed Deposit Calculator
The fixed deposit calculator helps to identify the maturity value of the deposit. It reveals the value of interest receivable at the end of the investment period. It even helps in deciding the investment amount and tenure of deposit. By using this, the depositor can compare the returns offered by various banks at different intervals. To check the maturity value the user needs to feed the amount of investment, tenure and the rate of interest prevalent on that tenure in the fixed deposit calculator. Also, feed the interest payment frequency to get the accurate results. Once all the required information is entered, the calculator automatically computes the result.
Methods of Interest Calculation
There are two ways of calculating interest on fixed deposit namely, simple interest and compound interest. The banks pay both the simple interest and compound interest. The interest on deposits booked for short period of time is calculated at simple interest. Whereas, compound interest is paid on the deposits remaining with the bank for longer duration.
- Simple Interest - It refers to an interest that is calculated as a percentage of the principal amount. The principal amount remains same throughout the tenure and hence, the growth in the deposit is uniform.
- Compound Interest - It is the type of interest that is calculated as a percentage of principal and interest accumulated in the previous period. That is, the principal amount keeps on changing throughout the duration of deposit. The returns are comparatively high than the simple interest.
How To Open FD Account Online
The fixed deposit application process is very simple. The depositor just has to visit the bank branch along with the required documents and submit the KYC form. Some banks even provide the facility of booking the fixed deposit online. The depositor just needs to login the bank's official website and click on apply online tab to fill the online application form. After the submission of the form, the deposit amount is debited from the current/ savings account of the depositor.
Fixed Deposit Application Form
The fixed deposit application forms are available at the bank branches. To avail the facility of fixed deposit, duly filled form is to be submitted along with the requisite documents. Fill in the personal details, choose the type of plan you are opting for and select the interest payout option. Provide the maturity details and the details of the nominee. The form comprises of the following fields :
- Personal details
- Fixed deposit plan details ( amount of deposit and interest payout frequency)
- Maturity instructions (tenure of policy, auto-renewal)
- Details of nominee
- Signature
Eligibility
Following individuals and groups are eligible to invest:
- Individuals
- Hindu Undivided Families (HUFs)
- Minor represented by parents / guardian
- Guardian on behalf of societies, clubs, trusts and associations
- Associations
- Clubs
- Trusts
- Sole proprietorship firms
- Partnership firms
- Limited Companies
Documents Required
| Category | Documents |
|---|---|
| An Individual, Hindu Undivided Family, Sole Proprietorship Concern |
|
| Trusts |
|
| Associations / Clubs |
|
| Partnership Firm |
|
| Public or Private Limited Companies |
|
List Of KYC Documents
| ID Proof | Address Proof |
|---|---|
| Passport | Passport |
| PAN Card | Telephone Bill |
| Driving Licence | Electricity Bill |
| Voter ID | ID Card Issued by Post Office |
| Government ID Card | Bank Statement with Cheque |
| Senior Citizen ID Card | Any other ID proof or address proof document can be submitted subject to bank's satisfaction |
Things To Know About Fixed Deposits
- Interest Payout Options - The Banks offer the choice to the customers to select the frequency of the interest receivable on fixed deposit. As per the requirement, the customer can decide whether to take interest monthly, quarterly, half- yearly or annually.
- Cumulative and Non-cumulative Interest Options - With the cumulative interest option, the interest will keep getting compounded mostly on a quarterly basis and will be paid to you at maturity along with the principal amount. Whereas with a non-cumulative option, you will receive interest payments at any of the monthly, quarterly, half-yearly and annual intervals. And at maturity, you will receive the principal amount.
- Auto- Renewal - On the maturity of the fixed deposit, the principal amount or both the principal and interest amount is reinvested for the same period of time. The interest on the renewed deposit is paid at the interest rate prevailing on the date of maturity.
- Premature Withdrawal - Though fixed deposits are made for the fixed period of time but in the case of emergency, the depositor can withdraw the amount before the due date. However, the interest on deposit withdrawn will be paid at penal rates.
- Partial Withdrawal - The account holder can withdraw the required sum from the fixed deposit without breaking the entire deposit. The interest on the amount remaining will be calculated on the same rate of interest as in the beginning.
- Nomination - The depositor can add the nominee to his fixed deposit account by filling the nomination form.
- Loan Against Fixed Deposit - Most banks offer loan against fixed deposit. The customer can avail 70- 90% of the fixed deposit as the loan. Interest on loan against fixed deposit is lower than the other loans.
- Tax Deductable at Source - As per the Income Tax Act, interest received on fixed deposit is tax deductible. If the amount of interest received in a year exceeds the limit of INR 10,000 then the TDS deducted by the bank is 10% of the interest amount. However, if the bank doesn't have the PAN details of the customer then the TDS deducted is 20% of the interest amount.
Shall You Check the Credit Rating of Banks/NBFCs offering Fixed Deposits?
Checking the credit rating of banks/NBFCs offering fixed deposits will give you an impression of the lender. The rating determines the safety of your money invested in FDs. Rating agencies such as Fitch, Moody's, ICRA and others rate the fixed deposits based on the overall liquidity situation, profitability of the bank/NBFC, etc. If these turn good, the fixed deposit would most likely be AAA, AA and A, indicating a high level of safety. If the financials of the bank/NBFC is not up to the mark, ratings such as BBB, BB, B, C or D can be assigned. Fixed Deposits having such ratings might offer greater returns but at the expense of greater risks.
Tax Saver Fixed Deposits
Under Section 80C of the Income Tax Act, 1961 the applicant can avail the benefit of saving taxes on the fixed deposits. This facility is available in both the government and the private sector banks. The minimum investment amount is INR 100 whereas, the maximum permissible amount is INR 1,50,000. Under this plan, the amount cannot be withdrawn before the lock-in period of 5 years. The interest receivable can either be withdrawn or reinvested along with the principal depending upon the options offered by the bank.
Advantages of Fixed Deposits
There are several benefits of investing in fixed deposits. Few of them have been listed below :
- Optimum utilization of money currently not in use
- Promote the habit of saving in individuals
- Helps in increasing the hard earned money
- Assured returns
- Procurement of high interest
- One can borrow 70% - 90% of the amount available in the fixed deposit account
- On maturity, the interest is credited to the current/savings account