📖 What is a Fixed Deposit (FD)?
Fixed Deposit (FD) is a financial instrument offered by banks and post offices where you deposit a lump sum amount for a fixed tenure at a predetermined interest rate. FDs are considered one of the safest investment options in India as they offer guaranteed returns and are insured up to ₹5 lakh by DICGC.
📐 FD Calculation Formula
M = P × (1 + r/n)^(n×t)
P = Principal r = Interest Rate n = Compounding Frequency t = Time in Years
📊 Bank-wise FD Interest Rates (2024-25)
| Bank | General Rate | Senior Citizen Rate |
|---|
| SBI | 7.1% - 7.5% | 7.6% - 8.0% |
| HDFC | 7.2% - 7.6% | 7.7% - 8.1% |
| ICICI | 7.1% - 7.5% | 7.6% - 8.0% |
| Axis | 7.0% - 7.4% | 7.5% - 7.9% |
| Post Office | 7.5% | 7.5% |
💡 Types of Fixed Deposits
- Cumulative FD: Interest reinvested, paid at maturity (maximizes returns)
- Non-Cumulative FD: Interest paid periodically (monthly/quarterly) for regular income
- Tax-Saver FD: 5-year lock-in, tax deduction under Section 80C
- Senior Citizen FD: 0.5% higher interest rate
💰 Tax on FD Interest: Banks deduct TDS at 10% if interest exceeds ₹40,000/year (₹50,000 for senior citizens). Submit Form 15G/15H to avoid TDS if income is below taxable limit.
❓ FAQ
❓ Which bank offers the highest FD rate? ▼
Small finance banks offer 8.5-9% rates. Large banks offer 7.1-7.6%. Senior citizens get 0.5% extra.
❓ How does compounding frequency affect returns? ▼
Monthly compounding gives higher returns than annual compounding. More frequent compounding = higher maturity amount.
❓ Is FD interest taxable? ▼
Yes, FD interest is fully taxable. TDS deducted at 10% above ₹40,000/year (₹50,000 for senior citizens).
❓ Cumulative vs Non-Cumulative FD? ▼
Cumulative: reinvests interest for higher returns. Non-cumulative: pays interest periodically for regular income.
❓ Minimum FD tenure? ▼
Minimum tenure is 7 days, maximum is 10 years. Most banks offer 1-10 year tenures.