A Fixed Deposit (FD) is the most popular savings instrument in India — approximately ₹200 lakh crore is held in bank FDs. You invest a lump sum for a fixed tenure at a guaranteed interest rate. The FD calculator helps you compare maturity amounts across different tenures and compounding frequencies so you can choose the deposit that best meets your goal.
Compounding Frequency — Monthly vs Quarterly vs Annual
FD interest can be compounded monthly, quarterly, half-yearly, or annually. More frequent compounding = higher effective yield. An FD at 7% compounded quarterly has an effective annual yield of ~7.19%, while the same rate compounded monthly gives ~7.23%. For long tenures, always prefer more frequent compounding.
Senior Citizen FD Rates
Most banks offer 0.25–0.75% higher FD interest to senior citizens (age 60+). Some small finance banks offer senior citizen rates as high as 9–9.5% for 1–3 year FDs. Senior citizen FD interest up to ₹50,000 per year is exempt from TDS under Section 80TTB.
Tax-Saving FD vs Regular FD
A tax-saving FD has a 5-year lock-in and qualifies for Section 80C deduction up to ₹1.5 lakh. The interest rate is the same as a regular 5-year FD. However, interest earned is fully taxable — unlike ELSS (which also qualifies for 80C and offers market-linked returns). Tax-saving FDs are completely safe but offer lower post-tax returns.
Frequently Asked Questions
Is FD interest taxable?
Yes. FD interest is added to your income and taxed at your slab rate. TDS at 10% is deducted if interest exceeds ₹40,000/year per bank. Submit Form 15G/15H if your income is below the taxable limit to avoid TDS.
Is my FD safe if the bank fails?
DICGC insures deposits up to ₹5 lakh per depositor per bank, covering principal + interest. Spread large deposits across banks for full insurance coverage.
What is the difference between cumulative and non-cumulative FD?
Cumulative FD reinvests interest, which compounds and is paid at maturity. Non-cumulative FD pays out interest periodically (monthly/quarterly/annually) — ideal for retirees who need regular income.
Can I break my FD before maturity?
Yes. Most banks allow premature withdrawal with a 0.5–1% penalty on the applicable rate. Tax-saving FDs cannot be broken before 5 years.
Which bank offers the highest FD rate currently?
Small Finance Banks (Unity SFB, Suryoday SFB, ESAF SFB) typically offer the highest FD rates — often 8.5–9.5% for 1–3 year tenures. Compare current rates on platforms like BankBazaar before investing.