Indian investors have been introduced to a wide range of investment products over the years with different risk levels and return possibilities. Fixed deposits have maintained a solid popularity among investors of all ages and financial objectives. Banks are the major issuers of FDs in the country, with attractive perks.
Currently, bank fixed deposits are undoubtedly considered one of the safest investments that offer steady returns. Before you add this investment tool to your portfolio, tracking the latest interest rates offered by the top-rated FD issuers is important. You should also have a good understanding of the various factors that can impact interest rates, the tax implications, and how to invest.
Key Features of Bank FDs
With some differences in the details, bank fixed deposits offer the following features!
- Tenure: With tenures ranging between 7 days and 10 years, investors enjoy great flexibility when investing in bank fixed deposits.
- Minimum and Maximum Deposit Amount: Different banks have different minimum deposit requirements, with the mark being as low as ₹ 50. There is no maximum cap.
- Premature Withdrawal: Most banks allow investors to withdraw before maturity with a fixed penalty.
- Auto-Renewal: This feature makes reinvestment more convenient for investors.
- Compounding Interest: With compounding interest, the returns are added to the principal amount at every compounding interval, creating a great opportunity for wealth and capital growth.
Top Interest Rates of Bank FDs for 2024
Check out the highest interest rates on bank FDs for 2024!
| FD Scheme | Bank FD Interest Rates 2024 |
|---|---|
| Axis Bank FD (Tax Saving) | Up to 6.85% |
| IDBI Bank FD (Tax Saving) | Up to 6.85% |
| IndusInd Bank Tax Saver Scheme | Up to 7.50% |
| RBL Bank FD (Tax Saving) | Up to 7.05% |
| SBI Bank FD (Tax Saving) | Up to 6.60% |
| HDFC Bank FD (Tax Saving) | Up to 6.60% |
| Punjab and Sind Bank FD (Tax Saving) | Up to 6.60% |
| Union Bank of India FD (Tax Saving) | 6.70% |
| Canara Bank FD (Tax Saving) | 6.50% |
| IDFC First Bank FD (Tax Saving) | 6.50% |
| PNB FD (Tax Saving) | Up to 6.30% |
| Bank of Baroda FD (Tax Saving) | Up to 6.30% |
Factors Influencing the Interest Rates of Bank FDs
The repo rate of the RBI dictates the interest rate range offered on fixed deposits by banks. It is basically the rate at which the RBI charges banks for lending them money. Generally, a high repo rate indicates a low interest rate offered by a bank and vice versa.
The interest rates mentioned in the table above are the range of interest to be expected when investing in bank FDs. However, certain factors will determine the particular rate the bank will offer to individual investors.
- Age: Senior citizens receive a 0.25% to 0.50% higher interest rate on bank FDs than regular investors.
- Deposit Amount: The higher you invest, the higher your returns will be. Note that bulk deposits of ₹ 1 crore or more will fetch higher rates.
- FD Tenure: While banks offer great flexibility to investors, it can affect interest rates. Longer tenure tends to come with higher interest rates.
Advantages of Investing in Bank FDs
Bank FDs have been one of the most sought-after investment options due to the many benefits they offer.
- High Interest Rates: Bank FDs offer higher interest rates than regular savings accounts, allowing better financial growth opportunities.
- Assured Returns: FDs are mostly unaffected by the ups and downs of the market. Your FD will continue to earn interest at the same rate throughout the entirety of the tenure.
- Suitable for Different Financial Goals: Whether you have short term, mid term, or long term financial goals, you can find a suitable FD.
- Flexible Payout Options: Ranging from monthly to quarterly to semi-annually to annually, you can pick a preferable payout option. It is highly beneficial for those looking for a regular income source.
- High Liquidity: If required, you can withdraw from the FD before maturity.
- Overdraft Facility: The overdraft facility of FD is useful because it makes loan approval easy by acting as collateral and also helps in getting a lower interest rate than personal loans.
Tax Implications on Bank FDs
FD returns are considered income and taxed accordingly. Returns up to ₹ 40,000 are exempt from taxation. You will have to file forms 15G and 15H at the beginning of the fiscal year to avoid a TDS deduction. Anything above ₹40,000 is taxed at 10% for PAN holders and 20% for others.
What is Corporate FD?
When looking for a better and equally safe and reliable investment plan than bank FDs, you can opt for corporate FDs. Offering you 1-3% higher interest rates than bank FDs along with flexible term periods, corporate FDs are growing as popular investment choices.
Fixed-term deposits offered by financial organisations (NBFCs) and held for a predetermined period of time at a predetermined interest rate are known as corporate fixed deposits (corporate FDs) or NBFC fixed deposits. Their maturity periods might vary from a few months to several years.
With a well-rated corporate fixed deposit, you can earn attractive returns while experiencing substantially lower volatility. Many rating agencies, including CARE, CRISIL, ICRA, and others, regularly provide a credibility rating to these term deposits. When choosing a corporate FD, one may wish to look for issuers that provide high-interest rates.
Top Corporate FD Interest Rates
Checkout the best corporate FDs and their interest rates for 2024
| Corporate Fixed Deposit | Corporate FD Interest Rate 2024 |
|---|---|
| Shriram Finance Limited | Up to 9.2% |
| Bajaj Finance Limited | Up to 8.6% |
Invest in Corporate FDs with GoldenPi
Sometimes, an investor has to monitor market trends and track investments continuously. However, with FDs, the hassles of investments can be eliminated to a great extent. Invest the amount and enjoy easy returns as per your selected payout option. Both offline and online FD investment options are available, making it convenient for all sorts of investors.
GoldenPi can make corporate fixed deposit investments even easier. It has all the latest numbers and information on the top investment options. Check it out and start your investing journey today!
FAQs About Bank FD Rates
Q1. How can I maximize FD returns?
One of the best features of FDs is their varied tenures. Since long term FDs have higher interest rates and you may have short term goals, take advantage of both. You can also look to invest in corporate FDs, which will not only offer you better interest rates but also diversify your portfolio. This way, you can fulfil short term goals while getting higher returns.
Q2. Is investing in FDs a good investment choice in 2024?
Fixed deposits continue to offer high-interest rates with low risk. The process of investing in FD has become more convenient with digital facilities. Therefore, fixed deposits are beneficial investment options for capital development as well as portfolio diversification.
Q3. Is tax imposed on senior citizen FDs?
Yes, senior citizen FDs are subject to taxation. Instead of ₹ 40,000 like regular FDs, the threshold for taxation is ₹ 50,000.
Q4. Is it a wise decision to withdraw from fixed deposits before maturity?
Premature withdrawals from fixed deposits attract penalties. That said, it can offer financial assistance during emergencies. If you are considering withdrawing, you should view the penalty and the FD issuer’s policy properly.
Q5. Can an FD help pay regular bills for a retired individual?
Yes! With the monthly payout option, FDs can help retired individuals and anyone else pay regular bills.
Q6. What is the sweepout facility?
Whenever the amount in your savings account crosses a predetermined limit, the excess fund is automatically transferred to your fixed deposit account. This sweep-out facility allows you to maximise your returns without putting in any extra effort.
Q7. How do I choose the ideal fixed deposit for me?
Apart from high interest rates, you should check out the policies of the FD providers. They should offer flexible tenures, low penalties and charges, an easy account opening facility, and overdraft facilities.
