FD Basics — How It Really Works
A Fixed Deposit is a lump sum deposited with a bank for a fixed tenure at a predetermined interest rate. Unlike savings accounts, FD rates are locked in at the time of booking — rate changes after booking don't affect your return.
| Feature | Details |
|---|---|
| Min deposit | ₹1,000 (most banks) |
| Tenure range | 7 days to 10 years |
| Interest options | Monthly, quarterly, half-yearly, annual payout OR reinvested (cumulative) |
| Compounding | Quarterly (most banks) |
| Premature withdrawal | Allowed; 0.5–1% interest rate penalty |
| Insurance cover | Up to ₹5 lakh (DICGC) |
FD Interest Rates 2026 — Who Offers the Best?
| Bank Type | Typical Rate (1–3yr) | Senior Citizen Rate | Safety |
|---|---|---|---|
| Large PSU banks (SBI, BOB) | 6.75–7.25% | 7.25–7.75% | Highest |
| Large private banks (HDFC, ICICI) | 7.00–7.40% | 7.50–7.90% | High |
| Small finance banks | 8.00–9.50% | 8.50–10.00% | Medium (DICGC covered) |
| Post Office TD | 6.90–7.50% | Same (no extra benefit) | Government (100% safe) |
| Corporate FDs (AAA-rated) | 7.50–8.50% | Varies | Medium-High |
Cumulative vs Non-Cumulative FD
| Type | Interest | Best For |
|---|---|---|
| Cumulative (Reinvest) | Compounded, paid at maturity | Wealth building, goal-based savings |
| Non-Cumulative (Payout) | Paid monthly/quarterly/annually | Retirement income, regular cash flow |
FD Tax — The Full Picture
- FD interest = "Income from Other Sources" — taxed at your income slab rate
- TDS at 10% deducted if interest > ₹40,000/year (₹50,000 for senior citizens)
- Submit Form 15G (under 60) or 15H (60+) if income below taxable limit to avoid TDS
- Even if no TDS: you must declare interest in ITR every year (not just at maturity)
- Tax-saver 5-year FD: ₹1.5L invested = ₹1.5L 80C deduction (Old Regime only)
🏦 Calculate FD Maturity & Tax
Use FD Calculator →Q: Should I split FD across multiple banks?
Yes — for amounts above ₹5 lakh. DICGC insures up to ₹5 lakh per depositor per bank. ₹20 lakh across 4 banks = fully insured. Also, splitting across banks lets you stagger maturities (FD ladder strategy) for regular liquidity.
Q: Is post office FD safer than bank FD?
Post office Time Deposits are backed by the Government of India with no deposit limit — 100% safe regardless of amount. Bank FDs are insured only up to ₹5 lakh per bank. For amounts above ₹5 lakh, post office TD is safer if you're prioritizing capital protection.
⚠️ For educational purposes. Please consult a certified financial advisor for personalised advice.