A Steady Way to Grow Your Savings
Fixed Deposits can help you set aside a lump sum for a chosen period at an agreed interest rate. Explore the features, available payout options and important points to consider before choosing a deposit.
Known Interest Rate
Understand the applicable interest rate and deposit terms before booking.
Choice of Tenure
Explore available deposit periods to match your intended time horizon.
Defined Maturity
Know the scheduled maturity date and applicable payout terms when you invest.
Interest Payout Choices
Choose cumulative or periodic payout options where the institution offers them.
What Is a Fixed Deposit?
A Fixed Deposit (FD) is a deposit arrangement in which an individual places a lump sum with a bank or another institution offering the product for a specified period. The applicable interest rate and payment terms depend on the deposit selected.
Depending on the product, interest may accumulate until maturity or be paid at agreed intervals. Before opening an FD, review the interest rate, tenure, maturity amount, withdrawal conditions and tax implications.
Key Features
- A specified deposit period.
- Interest calculated according to the product terms.
- Options for maturity or periodic interest payouts, where available.
- Conditions governing premature withdrawal.
- Tax treatment based on applicable income-tax rules.
How Safe Is a Fixed Deposit?
Deposit safety depends on the institution, the product terms and the applicable protection framework. Eligible bank deposits are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to its rules.
The limit covers eligible principal and interest combined across accounts held in the same right and capacity at the same insured bank. Coverage is subject to DICGC rules and does not automatically apply to every institution or investment product.
What Affects Fixed Deposit Interest Rates?
Interest rates are not identical across all institutions or deposit products. Check the current rate and applicable terms directly with the institution before investing.
Institution
Rates and deposit conditions vary between banks and other deposit providers.
Deposit Tenure
The applicable rate may differ according to the selected deposit period.
Deposit Amount
Some products may offer different rates for different deposit amounts.
Payout Method
Cumulative and periodic payouts can change the timing and amount of money received.
Common Types of Fixed Deposits
Different FD products may have different payout structures, eligibility requirements and withdrawal conditions.
Cumulative Fixed Deposit
Interest accumulates according to the product terms and is generally paid with the principal at maturity. Compounding and payment rules vary by institution.
Non-Cumulative Fixed Deposit
Interest is paid at specified intervals, such as monthly, quarterly, half-yearly or annually, depending on the available payout options.
Tax-Saving Fixed Deposit
Eligible bank tax-saving FDs generally have a five-year lock-in. Any tax deduction depends on the applicable law, eligibility and tax regime.
Senior Citizen FD
Some institutions offer additional interest rates to eligible senior citizens, subject to their own terms and conditions.
Callable Fixed Deposit
Premature withdrawal may be available subject to the product's rules, applicable interest adjustment and any prescribed penalty.
Non-Callable Fixed Deposit
Premature withdrawal may be restricted, except where permitted under the applicable terms or regulatory requirements.
Things to Consider
Compare the available terms carefully before choosing a Fixed Deposit that fits your needs and time horizon.
- Compare current rates offered by eligible institutions.
- Review tenure, payout frequency and maturity terms.
- Understand early withdrawal restrictions and penalties.
- Verify applicable deposit insurance coverage.
- Consider tax implications and TDS provisions.
- Read the complete product terms and conditions.
- Keep your near-term cash requirements in mind.
How Is FD Interest Taxed?
Interest earned on Fixed Deposits is generally taxable under the applicable income-tax rules. A bank may deduct tax at source (TDS) when the prescribed conditions and thresholds are met.
TDS is not necessarily the final tax payable. Your actual tax liability depends on your total taxable income and the rules applicable to your circumstances. Tax-saving FDs may qualify for deductions only when the relevant statutory conditions are met.
Review the current tax rules or consult a qualified tax professional for guidance specific to your situation.
Frequently Asked Questions
What is the minimum amount required to open an FD?
The minimum deposit amount depends on the institution and the particular FD product. Check the current eligibility criteria before booking.
Can I withdraw my FD before maturity?
Some FDs permit premature withdrawal subject to applicable conditions, interest adjustments or penalties. Certain products may restrict early withdrawal.
Are all Fixed Deposits insured up to ₹5 lakh?
No. DICGC protection applies to eligible deposits at insured banks and is subject to the prescribed rules. It does not automatically cover every institution or investment product.
How can I check current FD interest rates?
Rates vary over time and by institution, tenure, deposit amount and depositor category. Confirm the current rate and terms directly with the institution.
Is interest from an FD tax-free?
FD interest is generally taxable under applicable income-tax rules. Any TDS deducted may be adjusted against your final tax liability according to the applicable rules.
Which FD payout option should I choose?
The suitable option depends on whether you prefer interest payments at intervals or accumulation until maturity. Compare the available terms and cash-flow requirements before deciding.
Explore Fixed Deposit Options
Understanding the available interest rates, tenure choices and payout terms can help you compare Fixed Deposit options more confidently. Contact our team if you would like assistance understanding the available choices.
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