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

On 3-year fixed deposits, many banks are giving attractive rates. In many instances, the interest earned on 3-year deposits is significantly higher than that earned on 1-year or 2-year deposits. Fixed deposits are a safe investment option that provides consistent interest rates, special rates for seniors, no market risk, and tax advantages. It is important to compare the recently fixed deposit rates given by the country’s leading banks before opening a new fixed deposit or renewing an existing one.

What is FD Interest Rate?

The FD rate of interest is the interest rate on a fixed deposit plan. FDs, which are issued by a number of banks and NBFCs, are very popular among investors since they offer a good rate of interest and the safest returns. Maturity tenure refers to when people invest a set amount for a set period of time in various types of FDs. When the investment matures, the financial institutions refund both the principal and the interest earned 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 Public Sector Banks

Name of the Bank

For General Citizen(P.a)

For Senior Citizen(P.a)

SBI Bank

2.90% to 5.40%

3.40% to 6.20 %

Punjab National Bank

2.90% to 5.25% 3.50% to 5.75%
Canara Bank 2.90% to 5.25%

2.90% to 5.75%

Bank of Baroda

2.80% to 5.25% 3.30% to 5.75%
Bank of India 2.85% to 5.05%

3.50% to 5.80%

How to Calculate FD Rates

A fixed deposit calculator tool is used to determine the maturity amount that an investor should expect at the end of a specified term for a specific deposit amount at the current rate of interest. A fixed deposit calculator can be used to calculate the amount of interest earned on the fixed deposits. The maturity amount is calculated using the deposit amount, fixed deposit interest rate, and fixed deposit tenure. The maturity amount is the amount received at the end of the term of the FD. 

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 for me to invest in a fixed deposit?

If you are in the following categories, you can invest in a fixed deposit:
Undivided Hindu Family (HUF).
Partnership Firms, Limited Companies, and Group Companies
Sole traders
Resident Indians.
Associations, Clubs, and Societies.
Family Trusts.
Minors.

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.

What are the minimum and maximum deposit amounts for a Fixed Deposit?

Banks and NBFCs have different minimum amounts. It usually ranges from 1000 to 25,000 dollars. The greatest amount that can be put in a Fixed Deposit has no upper limit.

Is it possible to break the tax-saving FD?

No. Premature withdrawals from tax savings FD are not permitted. You cannot break these FDs before the five-year term is up, according to the Bank Term Deposit Scheme 2006.

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