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If you are planning to invest ₹1 lakh with a view to getting a consistent monthly income, then the Monthly Income Fixed Deposit (FD) is probably one of the schemes on your radar. Monthly Income FDs have been favored by many retirees, salaried individuals, and conservative investors as they get periodic interest payments rather than receiving all their earnings on maturity.
Now that we know about FD schemes in general, let us find out how much monthly income you can earn through a fixed deposit of ₹1 lakh and also know some of the banks that offer this scheme of monthly interest payments.
Disclaimer: The information provided in the article is purely for educational purposes and is in no way financial or investment advice. The interest rate on fixed deposits varies according to different banks.
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Can You Get Monthly Interest on a ₹1 Lakh Fixed Deposit?
Yes. Most banks offer the facility to pay interest every month rather than paying it at maturity.
Under the monthly income FD scheme, your principal amount stays deposited in the bank for the entire period of the FD, whereas the interest gets paid to your bank account every month.
The actual interest amount that gets paid every month varies depending on:
- FD interest rate
- Tenure of deposit
- Interest payment facility offered
- Terms of the bank
Interest Income from ₹1 Lakh FD
The following table provides you with an approximate idea of the monthly interest income that you can earn from a ₹1 lakh FD.
| Annual Interest Rate | Approximate Monthly Interest* |
| 6.00% | ₹500 |
| 6.50% | ₹542 |
| 7.00% | ₹583 |
| 7.50% | ₹625 |
| 8.00% | ₹667 |
Formula:
Monthly Interest = (Principal × Annual Interest Rate) ÷ 12
Illustrative calculation. Actual payouts may differ depending on the bank’s interest calculation method, TDS, and applicable terms.
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Which Banks Offer Monthly Income Fixed Deposits?
FD interest rates per month are available from most public sector banks and private banks. There may be banks that may provide high-interest rates to senior citizens as well.
Before taking FDs into account, you need to compare these factors:
- Interest rates
- Tenure
- Minimum deposit
- Withdrawal policy
- Payout of interest monthly
Rather than choosing an FD based on its interest rates alone, check whether it suits your financial needs.
Should You Use an FD Monthly Interest Calculator?
Yes. An FD Monthly Interest Calculator is one of the easiest ways to determine how much monthly interest can be obtained from an FD.
Using:
- Amount to be invested
- Interest rate
- Tenure
You will get the idea of what a monthly payout can be.
However, the amount calculated by using a calculator is just an approximation since it ultimately depends on the prevailing interest rate and the methodology of the banks for calculating interest.
What Should You Consider Before Choosing a Monthly Income FD?
Monthly income FDs can provide predictable cash flows, but they may not suit every financial goal.
| Factor | Why It Matters |
| Interest Rate | Determines your monthly income. |
| Payout Frequency | Ensure monthly payout is available. |
| Deposit Tenure | Should align with your income needs. |
| Taxation | Interest earned may be taxable under applicable income tax provisions. |
| Premature Withdrawal | Early closure may be subject to the bank’s terms and applicable penalties. |
Reviewing these factors can help you select an FD that fits your financial plan.
Are There Other Fixed-Income Investment Options?
Apart from bank fixed deposits, there are several other options in fixed-income investments, depending on their requirements and risk profile. For example, investors can consider investing in corporate bonds that have been listed, G-Secs, PSU bonds, and even Non-Convertible Debentures (NCDs).
Fixed-income securities may pay periodic interest, which could be monthly, quarterly, semi-annual, or annual, depending upon the type of fixed-income product chosen. They have many differences when compared to bank fixed deposits.
These include differences in issuer, risk profile, liquidity, tax treatment, and returns.
| Feature | Fixed Deposit | Listed Bonds |
| Issuer | Banks | Government, PSU, or Corporate Issuers |
| Income Frequency | Depends on the bank’s FD scheme | Depends on the bond’s coupon terms |
| Tradability | Generally not traded | Some listed bonds may be traded on exchanges |
| Risk Profile | Depends on the bank | Varies based on the issuer and credit quality |
This comparison is for educational purposes only and should not be interpreted as a recommendation of one investment product over another.
Frequently Asked Questions (FAQs)
The monthly income varies according to the rate of interest. In case of 7% annual interest, an FD worth ₹1 lakh can yield around ₹583 a month, prior to taxes, based on how the bank calculates it.
Both government and private sector banks have fixed deposits that pay interest monthly. There is a variation in tenure and interest rates among different banks.
Yes. The interest received through FDs is usually taxable based on the tax slab applicable to the depositor. Additionally, Tax Deductible at Source (TDS) might also be applicable under the Income Tax Act.
Certain types of bonds offer regular interest payments in accordance with the bond terms. These could be monthly, quarterly, semi-annual, or annual.
Disclaimer
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
