Savings is something that a common man is bound to have. People put their savings in a bank account and the banks allow them to remove a sum of money as per convenience. But when the consumer decides that they do want to avail long term benefits from their current savings, they put it in a Fixed Deposit account. Fixed deposits are also known as Term deposits help an individual, save a stipulated amount with a bank. An FD account is made available both by banks and also non-banking finance companies (NBFC). Unlike savings, here the consumer is not allowed to remove the pledged amount before the fixed maturity date of the FD. If they do, penalties are applied. The FD interest rates are higher than a normal saving account. However, they are also quite dynamic, directly correlated to changes in the market. Fixed deposit interest rates vary from bank to bank. In this article, we are going to discuss the banks that provide the best and highest interest rates.
Fixed Deposit – Benefits & Features
Let us have a look at the benefits and features that come along with Fixed Deposit before learning about the banks.
Benefits of FD
Here are the benefits in concern:
The return of the invested money by the consumer is guaranteed. It is returned at the end of the maturity period. Since this is not a market invested scheme, the market fluctuations do not affect the returns. The investments remain similar to when the FD account is initiated. This benefit is enjoyed thoroughly by the people.
Fixed deposit interest rates are higher compared to savings accounts. The rate of interest depends on the tenure you choose. The rate of interest is lowered when credit is not in demand.
One of the benefits of FD accounts is the adjustable time allotment. The time given is either 7-14 days or up to 10 years. It depends on the customer to choose how long they would like their FD to stay intact. The tenure of the FD directly affects the interest rates.
The interest depends on the maturity period of the customer’s FD. The higher the period, the higher the interest and also whether the consumer wants to receive it periodically, monthly, quarterly or even annually.
Features of FD
Fixed Deposit feature list goes as:
- The tenure of the FD account is flexible and can range between 7 days up to 10 years. It varies from bank to bank.
- The investment returns are compounded based on whether, that is, monthly, quarterly or even annually.
- Senior citizens experience the benefit of receiving a slightly higher return due to the increase in interest rates.
- Taxpayers can invest in tax-saving FDs under section 80C.
- Consumers can reinvest the matured fund as per convenience.
Banks with the highest FD interest rate
The table below shows a detailed study of banks and interest rates available within a tenure of 1 year.
|Punjab and Sindh Bank||1 year||5.15%|
|LIC Housing Finance Limited||1 year||5.50%|
|Fincare Small Bank||1 year||6.00%|
|Repco Bank||1 year||6.25%|
|Utarkash Small Finance Bank||1 year||6.75%|
The interest rate differs from bank to bank, as seen in the above table. The bigger the tenure gets, the higher the interest rates are charged.
Other well-known options are SBI bank, Canara Bank, HDFC bank, BOB (Bank of Baroda) or even Axis Bank. These banks provide interest rates that start from a minimum of 2.90% to a maximum of 5.60%.
Let us brief you about the 5 banks that are known for their planning of loans and schemes.
SBI Bank’s Fixed Deposit scheme is one of the most attractive arrangements it provides. The interest rates that the bank offers start from 2.90% and ranges up to 5.40%. Also, The rate of interest increases by 0.8% when it is offered to senior citizens. It offers a tenure ranging from 7 days to 10 years. The rate of interest also changes on whether the amount is above or below 2 crores.
Canara bank offers interest rates starting from 2.90% to 5.35% p.a. for general people who decide on Fixed Deposit accounts at the bank. For senior citizens, it ranges between 2.90% to 5.85%. Like SBI, Canara bank also offers tenure of 7 days to 10 years. It also has a scheme called Tax Saving FD.
Like other banks, HDFC also offers a tenure of 7 days to 10 years but the difference is that the bank decodes the rate of interest on basis of the tenure. It offers a rate of interest of 5.60% if the tenure ranges from 7 days to 5 years. Senior citizens experience a spike of 0.50% in the interest rates. If the tenure is above 5 years then for general people the rate of interest is 5.60% while for senior citizens is 6.35%. The rates came into action on 14th Feb 2022.
Bank Of Baroda offers 3 types of Fixed deposit accounts. They are Short term deposits, Long term deposits and the Captial Gain account scheme. The interest rate that is provided ranges from 2.80% to 5.25%. For senior citizens, the rate of interest is 0.50% more when the tenure is between 7 days to 5years.
Axis bank or formerly known as UTI bank is an Indian banking and finance company. The tenure offered remains similar to other banks 7 days to 10 years. It offers an attractive range of interest that starts at 2.50% and ends at 5.75%. The rate of interest for senior citizens start from 2.50% and can go up to 6.50%. The rate of interest also varies based on the FD amount. These came into effect on 1st Jan 2022.
Upon detailed study, we conclude that SBI Bank provides the best and highest rate of interest in terms of a Fixed Deposit account. The available rate of interest ranges between 2.90% to 5.50%. Also, you need to deposit Rs.1,000 and there is no limit to the maximum deposit.
Fixed Deposit is a great investment idea if the consumer is looking for guaranteed interest rates with no market-related risks. They are a great choice for senior citizens to look into as well. The consumer who doesn’t want to risk much while saving their money must consider Fixed Deposit as their ideal option. As visible, the State Bank of India provides the best and highest interest rate in Fixed Deposits with guaranteed returns.