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Top 5 Best Fixed Deposit options in Private Sector Banks in 2021

Fixed deposits are a safe investment option that offers steady interest rates, special rates for seniors, a number of interest payment methods, no market risk, and income tax benefits. Before opening a new fixed deposit or renewing an existing one, it is crucial to assess the latest fixed deposit rates offered by the country’s leading banks. 

What is FD Interest Rate?

The interest rate on a fixed deposit plan is known as the FD rate of interest. FDs, which are offered by a variety of banks and NBFCs, are quite popular among investors since they give a decent rate of interest and the most secure returns. People invest a fixed sum for a predetermined duration using various forms of FDs, which is referred to as maturity tenure. When the investment matures, the financial institutions refund the principal amount as well as the income generated over the term.

Features of an FD

  • All banks’ FD rates are higher than the interest rates on normal savings accounts.
  • A fixed deposit account can be opened by any Indian resident, including minors and Hindu Undivided Families.
  • The banks have a sweep-in service available. You can link your savings bank account to your FD account using this service. The benefit of this feature is that it allows you to automatically transfer money from a savings bank account to an FD account.
  • Banks also offer the option of taking out a loan against a fixed deposit to cover any financial emergency. The money you put down serves as collateral for the loan you’ve taken out. Depending on your bank, you can borrow up to 75 percent to 90 percent of the amount of your FD.
  • In an application form, you can nominate up to two people. By producing acceptable death proof of the account holder, these two nominees are qualified to receive the funds.
  • It is not permitted to withdraw from the program early. As a result, you won’t be able to withdraw the money you’ve put into it before it matures. You can, however, remove this amount in an emergency by incurring a penalty.

5 Best Fixed Deposit options in Private Sector Banks

Name of the Bank

For General Citizen(P.a)

For Senior Citizen(P.a)

Yes Bank

3.25% to 6.50%

3.75% to 7.25 %

ICICI Bank

2.50% to 5.50% 3.00% to 6.30%
HDFC Bank 2.50% to 5.50%

3.00% to 6.25%

Axis Bank

2.50% to 5.75%

2.505 to 6.50%

IDFC Bank 2.50% to 5.25%

3.00% to 5.75%

 

How to Calculate FD Rates

You can calculate how much interest your fixed deposit will earn over time using a free online interest calculator. Based on the interest rate and the principal amount, the FD Calculator will determine how much your deposit will yield at maturity. This is determined by a number of factors, including the interest compounding frequency, which differs per bank. It can be done every month, every quarter, every half-year, or every year.

Factors affecting FD rates

FD interest rates are influenced by a number of factors, some of which are given below:

  • Deposit Tenure: The lower the interest rate, the shorter the tenure, and the greater the interest rate, the longer or medium-term the tenure.
  • Deposit Amount: Interest rates would be greater for larger deposits, notably bulk deposits over Rs.1 crore.
  • Type of depositor: Fixed deposit interest rates are normally 0.25 percent to 0.50 percent higher for senior citizens.

 

Eligibility Criteria

The entities listed below are eligible to open an FD account in India:

  • NRI Indian resident
  • Minors
  • Senior citizens
  • Companies
  • Firms that form partnerships
  • Individuals or groups of investors
  • Clubs and societies
  • One-person business

 

FAQs:

Is it possible to get a loan against my FD?

Because a loan against a fixed deposit is a great feature, most banks offer it to their customers. It is possible to borrow up to 90% of the deposit amount (may vary as per your bank).

Is a fixed deposit subject to taxation?

The interest on a savings account is taxable. If the amount of interest earned in a year surpasses Rs 5000, TDS is payable. By completing form 15G/H to your bank or NBFC, you can avoid tax deductions.

Is it possible to get interest on my FD on a monthly basis?

Depending on your choices, your FD interest can be compounded monthly, quarterly, semi-annually, or annually. On the other hand, compounding on a basis will cut rates.

What is an FD nomination, exactly?

As an FD investor, you will be requested to name a nominee for your FD. The money will be given to your nominee if you die before the maturity date. A nominee is not required, although it is strongly recommended.

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