Fixed Deposit Interest Rates: Fixed deposits (FDs) offer a secure avenue for investment, particularly favored by risk-averse individuals and senior citizens. Recently, several top banks have raised their FD interest rates, with some offering up to 8.1% on 1-3 year tenures, making them an attractive option for those seeking stable returns.
Read More: FD vs RD: What is the difference between fixed deposit and recurring deposit? How do they work?
What is a Fixed deposit?
You can invest a specific amount at a fixed interest rate for a set period with a fixed deposit. The interest rate may vary depending on the bank’s terms. You can choose FD terms from one week to ten years.
Here are the fixed deposit interest rates from top banks for terms of 1 to 3 years:
| Bank Name | Highest interest rate (%) | Highest interest rate tenure | 1-3 years |
| Axis Bank | 7.2 | 17 months to less than 18 months | 6.70% to 7.20% |
| Bandhan Bank | 7.85 | 500 days | 7.45% -7.85% |
| DCB Bank | 8 | 25 months to 26 months | 7.15% to 8% |
| Federal Bank | 7.5 | 500 days | 6.80%- 7.50% |
| HDFC Bank | 7.25 | 18 months to less than 21 months | 6.60%-7.25% |
| ICICI Bank | 7.2 | 15 months to 2 years | |
| IDFC First Bank | 8 | 500 days | 6.50%- 8% |
| IndusInd Bank | 7.65 | 1 year to 2 years | 7% to 7.65% |
| Kotak Mahindra Bank | 7.4 | 390 days to less than 23 months | 6.50% to 7.40% |
| RBL Bank | 8.1 | 18 months to 2 years | 7.50% to 8.10% |
| Bank of India | 7.25 | 2 years | 6.8% to 7.25% |
| Canara Bank | 7.25 | 444 days | 6.85% to 7.25% |
| Indian Bank | 7.25 | 400 days – IND SUPER | 6.10% to 7.25% |
| Punjab National Bank | 7.25 | 400 days | 6.75% to 7.25% |
| Punjab & Sind Bank | 7.4 | 444 days | 6.20% to 7.25% |
| State Bank of India | 7.1 | 400 days – Amrit Kalash | 6.80% to 7% |
| Union Bank of India | 7.25 | 399 days | 6.75% to 7.25% |
FD Laddering strategy
With FD laddering, you divide your investment into multiple FDs with various maturity dates. Instead of putting all your money in one FD, you spread it across FDs with different maturity periods.
ICICI Bank describes the Fixed deposit Laddering Strategy as a method where you split a lump sum into multiple FDs, each with different maturity dates. Instead of putting all your money into one deposit, you spread it across several deposits with staggered maturity periods. This strategy aims to achieve a balance between earning consistent returns and having access to funds regularly.
Tax implications of Fixed deposits
Interest income from FDs is fully taxable and contributes to your overall tax obligation. Since FD interest is considered “income from other sources,” Tax Deducted at Source (TDS) is applicable. The bank deducts TDS at the time of crediting your account with interest earnings.
Read More: SWP: What Is It And How To Use It To Withdraw Money From Mutual Funds Regularly
For FD interest exceeding Rs 40,000 in a fiscal year, TDS is applicable. However, for individuals aged 60 or above, the TDS threshold is Rs 50,000.
