Fixed Deposit (FD) Guide

A Fixed Deposit (FD) is a bank deposit with a fixed interest rate and fixed tenure — the simplest, safest investment in India. You deposit once, the bank pays guaranteed interest (compounded quarterly), and you get everything back at maturity. Insured up to ₹5 lakh per bank under DICGC.

FD types

• Cumulative FD: interest reinvests (compounds) and pays at maturity — maximum returns. Use the FD calculator.
• Non-cumulative FD: interest paid monthly/quarterly — regular income for retirees.
• Tax-saving FD: 5-year lock-in, deduction up to ₹1.5 lakh under 80C — interest is still taxable.
• Senior citizen FD: +0.25 to +0.75% extra rate in most banks.
• Corporate FDs: from NBFCs/companies — higher rates (8–10%) but NOT insured by DICGC. Higher risk, only for those who understand it.

FD rates & TDS (as of Aug 2026, indicative)

• PSU banks: ~6.5–7.5% p.a.; private banks: ~7–8.5%; small finance banks: up to ~9%+.
• TDS: bank deducts 10% if interest exceeds ₹40,000/year (₹50,000 for seniors under 80TTB). Submit Form 15G/15H if your income is below the taxable limit to avoid TDS.
• Interest is fully taxable at your slab — FDs often pay less after tax than inflation, which is why long-term money often goes to mutual funds instead.

Smart FD strategies

• Laddering: split your money into 1/2/3/5-year FDs — you get better rates on longer tenures but some money matures every year (liquidity + rate flexibility).
• Keep FDs under ₹5 lakh per bank to stay fully insured — spread across banks if you have more.
• Loan against FD (up to 90%, rate = FD rate + 1–2%) beats breaking the FD when you need emergency cash.
• Match tenure with goals: emergency fund → 6–12 month FD; money for a purchase in 3 years → 3-year FD.

Frequently Asked Questions