Updated on: 29 Dec 2023 | 10 mins read
FDs, popular in India, involve depositing a fixed sum in a bank or NBFC for a set period, earning interest. At maturity, you receive your initial deposit back. These investments, offered by all banks and many NBFCs, come with options for different payment frequencies and carry minimal risk. This article compares 1-year FD rates across various banks/NBFCs, highlighting differences in interest for the general public and senior citizens.
Financial Institution | General Public | Senior Citizen |
---|---|---|
LIC Housing Finance | 5.65% | 5.90% |
ESAF Small Finance Bank | 6.00% | 6.50% |
Punjab & Sind Bank | 6.40% | 6.90% |
IDFC First Bank | 6.50% | 7.00% |
SBI | 6.80% | 7.30% |
Shriram City Union Finance | 7.67% | 8.17% |
Bandhan Bank | 7.25% | 7.75% |
Utkarsh Small Finance Bank | 8.00% | 8.60% |
ESAF Small Finance Bank
Utkarsh Small Finance Bank
Shriram City Union Finance
LIC Housing Finance
Bandhan Bank
IDFC First Bank
Punjab & Sind Bank
State Bank of India (SBI)
Fixed deposits are a safe means to park your funds for the desired term and earn guaranteed interest. FD interest rates for 1 year, though lower than most market-linked instruments, offer a fair rate of return. You should analyse the key features of the FDs offered by different institutions and choose the one that best suits your risk appetite, premature withdrawal requirements, and required returns.
Is FD in housing finance companies safe?
Fixed deposits with housing finance companies that are rated ‘Safe’ by credit rating agencies are safe and come with minimal risks.
How should I choose between a short-term FD and a long-term FD?
Longer-term FDs come with higher interest rates. Therefore, if you can manage by locking in your amount for more than 1 year, you should go for a Long term FD. Else, you have to opt for a short-term FD.
What is a recurring deposit?
A recurring deposit consists of a bank/post office deposit account in which you make monthly contributions. You will earn a fixed rate of interest on the accumulating deposit. This interest rate depends on the tenure of the RD you select and the deposit amount.
What is a sweep-in FD?
In a sweep-in fixed deposit, your savings or a current account is linked to your FD. You have to specify the minimum balance in the savings account, beyond which any amount is to be swept into the FD. This allows you to earn higher interest rates on your surplus money while maintaining minimum liquidity. In case the balance in your savings account falls short, you can withdraw the same from the linked FD without any penalties.
Can I link multiple FDs to one savings account?
Yes. You can link multiple fixed deposits to a single savings account.
Can I link multiple savings accounts to one FD?
No. You can link only one account to one FD.
Several macroeconomic factors, including inflation, monetary policy, and government regulations, influence the interest rates of 1-year FDs.
As of the moment, the majority of banks offering 1-year FDs have an interest rate ranging from 5%-8.6% per annum.
Market fluctuations and regulatory changes are prevalent, which can lead to changes in the interest rates on the 1-year FDs. Make sure to refer to your bank for such details.