Fixed Deposits: Compare The Best FD Rates Across 6 Months To 5 Years
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Key takeaways of fixed deposits
- The maturity tenure of FDs varies by bank and spans between seven days to ten years.
- The interest rate is compounded periodically i.e. monthly, quarterly or annually
- When compared to regular customers, senior citizens generally receive a 0.5 per cent higher interest rate.
- Withdrawals in part or in full are allowed, but they may be subject to penalties.
- Under Section 80C of the Income Tax Act of 1961, individuals can claim tax deductions by investing in 5-year tax-saving FD schemes.
- Investors can reinvest the money in an FD account until it matures for the potential term.
- A loan against a fixed deposit investment is also available for fixed deposit investors. In this situation, the maximum loan amount varies from one bank FD to the next. In this situation, the loan amount is limited to a percentage of the fixed deposit corpus.
- Returns are guaranteed because they are not linked to market ups and downs.
- Premature withdrawals are permitted with some penalties, ensuring that you will always have a fund to cover the unwanted crisis.
- Despite the fact that fixed comes with a lock-in period, you can liquidate the fund at any time. The lock-in period is not as long as it is for most investment instruments like PPF.
- With effect from 4 February 2020, you will be liable for a maximum compensation of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). FDs are a safe investment choice because of this framework.
Taxation on fixed deposits
According to the terms of the Income Tax Act, TDS, or Tax Deducted at Source, is deducted from interest earned from fixed deposits per year. As a result, interest income is included in income tax returns under the heading “Income from Other Sources.” Individuals who choose a 5-year tax-saving FD, on the other side, can claim a tax deduction on the principal amount of up to Rs. 1.5 lakh in a fiscal year. TDS will not be deducted from a Fixed Deposit’s earnings until they exceed Rs. 40,000 for non-senior citizens and Rs 50,000 for senior citizens. Non-senior citizens can submit Form 15G, and senior citizens can submit Form 15H to the bank in order to avoid TDS.
Who should invest in fixed deposits?
Fixed deposit investments are a great option for those who don’t want to take any risks with their capital. FD accounts are a good option if you want to keep your money safe over time and interested in growing your fortune or getting consistent returns. Many retirees who receive a lump sum as a result of their retirement invest it in FD so that they can welcome monthly interest payout into their personal finance space. When investors invest in market-linked securities like ELSS, Mutual Funds, NPS, and so on in order to achieve higher returns, they may be subjected to risks As a result, in order to achieve stable financial growth, investors must stick to secure investment vehicles like a fixed deposit of banks or post office. An investor’s risk tolerance pattern influences his or her investment strategies Higher returns often come with a higher risk, which may mean risking a large sum of money at some time in the future if the market turns against you. An optimal investment strategy is a blend of risky and risk-free investments tailored to an individual’s risk tolerance ability. Although most investments are customized to their specific needs, desires, and objectives, there are a few investment vehicles that are required in every portfolio and a fixed deposit is one of them.
List of banks with the best FD rates for amount below Rs 1 Cr across different tenures
| Bank | 6 months – 1 year | 1 year to 2 years | 2 years to 3 years | 3 years to 5 years | > 5 years |
|---|---|---|---|---|---|
| State Bank Of India | 4.40% | 5% | 5.10% | 5.30% | 5.40% |
| Canara Bank | 4.45% | 5.20% | 5.40% | 5.50% | 5.50% |
| Bandhan Bank | 5.25% | 5.75% | 5.75% | 5.50% | 5.50% |
| Yes Bank | 5.5 – 5.75% | 6.25% | 6.50% | 6.75% | 6.75% |
| Union Bank of India | 4.30% – 4.50% | 5.25% – 5.30% | 5.30% – 5.55% | 5.50% – 5.55% | 5.55% – 5.60% |
| Federal Bank | 3.75% -4.40% | 5.10% – 5.35% | 5.35% | 5.35% | 5.50% |
| Dhanlaxmi Bank | 4.50% | 5.25% – 5.30 % | 5.25% – 5.40% | 5.40% – 5.50% | 5.50% |
| South Indian Bank | 4.75% | 5.40% | 5.40% | 5.50% | 5.50% – 5.65% |
| TamilnadMercantile Bank | 5.25% | 5.75% | 5.65% | 5.50% | 5.50% |
| Karnataka Bank | 5.20% | 5.30% | 5.30% – 5.55% | 5.55% | 5.55% – 5.70% |
| Karur Vyasa Bank | 4.75% – 5.00% | 5.50% | 5.50% | 5.65% | 5.65% – 6.00% |
| IDFC Bank | 4.50% – 5.25% | 5.75% – 6.0% | 5.75% | 5.75% | 5.75% |
| DCB Bank | 5.95% | 6.05% – 6.70% | 6.50% | 6.75% | 6.75% |
| Axis Bank | 4.4% – 5.15% | 5.10% – 5.25% | 5.40% | 5.40% | 5.50% |
| HDFC Bank | 4.40% | 4.90% | 5.15% | 5.30% | 5.50% |
| IndusInd Bank | 4.5% – 5.75% | 6.50% | 6.50% | 6.50% | 6.25% – 6.50% |
| RBL Bank | 5.25% – 5.75% | 6.50% | 6.50% | 6.25% – 6.60% | 6.25% |
| Source: Bank websites |
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