Fixed Deposit (FD) — Best FD Interest Rates & How to Open FD Online

A Fixed Deposit (FD) is one of the safest and most popular investment options in India. Whether you're a salaried employee, retiree, or just starting your savings journey, FDs offer guaranteed returns with zero market risk.

This guide covers the latest FD interest rates, tax implications, how to open an FD online, and smart strategies to maximise your returns.

What Is a Fixed Deposit?

A Fixed Deposit is a savings instrument offered by banks and post offices where you deposit a lump sum for a fixed tenure at a predetermined interest rate. Key features:

• Guaranteed returns — interest rate is locked at the time of booking
• Flexible tenure — from 7 days to 10 years
• Safe investment — bank FDs up to ₹5 lakh are insured by DICGC
• Loan against FD — you can borrow up to 90% of your FD value
• Cumulative or non-cumulative — get interest at maturity or monthly/quarterly

Best FD Interest Rates — Comparison Table

Note: FD rates are indicative and change frequently. Always verify on the bank's official website before investing.

Rates as of early 2026. Senior citizens typically get 0.25%–0.50% extra across all banks.

Senior Citizen FD Rates

Senior citizens (60+ years) enjoy higher FD rates at most banks — usually 0.25% to 0.50% higher than regular rates. Some banks also offer super senior citizen (80+) rates with an additional 0.10%–0.25% premium.

If you're a senior citizen, also explore the Senior Citizen Savings Scheme (SCSS) which currently offers around 8.2% interest.

Tax on FD Interest — What You Need to Know

FD interest is fully taxable as "Income from Other Sources" and added to your total income. Here's how tax works:

TDS on FD

• Banks deduct TDS at 10% if your total FD interest from a bank exceeds ₹40,000 per year (₹50,000 for senior citizens)
• If you don't provide your PAN, TDS is deducted at 20%
• Submit Form 15G (below 60 years) or Form 15H (senior citizens) at the start of the financial year if your total income is below the taxable limit — this prevents TDS deduction

Tax-Saving FD (Section 80C)

A 5-year tax-saving FD qualifies for deduction under Section 80C up to ₹1.5 lakh per year. Key points:

• Lock-in period: 5 years (no premature withdrawal allowed)
• No loan against tax-saving FD
• Interest earned is still taxable
• Available at most banks and post offices

For more tax-saving options, check our guide on filing your Income Tax Return.

How to Open an FD Online — Step by Step

Almost every bank now lets you open an FD from your phone or laptop. Here's how:

Step 1: Log In to Your Net Banking or Mobile App

Open your bank's website or app and sign in. Don't have an account? See our guide on how to open a bank account online.

Step 2: Navigate to Fixed Deposits

Look for "Deposits" or "Fixed Deposit" in the menu. Most apps have it on the home screen.

Step 3: Choose FD Type

Select from:

• Regular FD — standard fixed deposit
• Tax-Saving FD — 5-year lock-in with 80C benefit
• Flexi FD — linked to savings account for auto-sweep

Step 4: Enter Amount and Tenure

• Enter the deposit amount
• Choose tenure (e.g., 1 year, 2 years, 5 years)
• Select cumulative (interest at maturity) or non-cumulative (periodic interest payout)

Step 5: Choose Nominee and Confirm

• Add a nominee
• Review interest rate and maturity amount
• Confirm with OTP or transaction password

Your FD is created instantly. You'll receive a confirmation via SMS and email.

Premature Withdrawal — Penalty and Rules

If you need money before maturity:

• Most banks charge a penalty of 0.5% to 1% on the applicable rate
• The interest is recalculated at the rate applicable for the actual period minus the penalty
• Tax-saving FDs cannot be withdrawn early (5-year lock-in)
• Some banks offer partial withdrawal or loan against FD as alternatives — consider these before breaking your FD

FD vs RD vs PPF — Which Is Better?

Verdict: If you have a lump sum and want guaranteed short-term returns, FD is ideal. For long-term tax-free growth, PPF is better. RD suits those who want to save monthly.

For girl child savings, also consider Sukanya Samriddhi Yojana which offers higher tax-free returns.

FD Laddering Strategy — Maximise Returns and Liquidity

Instead of putting all your money in one FD, split it across multiple FDs with different tenures. This is called FD laddering.

Example: You have ₹5 lakh to invest.

• ₹1 lakh in 1-year FD
• ₹1 lakh in 2-year FD
• ₹1 lakh in 3-year FD
• ₹1 lakh in 4-year FD
• ₹1 lakh in 5-year FD (tax-saving)

Benefits:

• One FD matures every year — you always have access to funds
• You capture higher long-term rates on some portions
• You avoid premature withdrawal penalties
• You can reinvest maturing FDs at current (potentially higher) rates

Frequently Asked Questions

Is FD interest taxable?

Yes, FD interest is fully taxable and added to your total income. TDS is deducted at 10% if interest exceeds ₹40,000/year (₹50,000 for senior citizens). You must declare all FD interest in your ITR.

What is the minimum amount to open an FD?

It varies by bank — SBI and PNB allow FDs from ₹1,000, while HDFC Bank requires ₹5,000 and ICICI Bank requires ₹10,000. Post Office time deposits start at ₹1,000.

Can I break my FD before maturity?

Yes, regular FDs can be broken early, but you'll face a penalty of 0.5%–1% on the interest rate. Tax-saving FDs (5-year) cannot be broken before maturity.

How do I avoid TDS on my FD?

If your total income is below the taxable limit, submit Form 15G (under 60) or Form 15H (senior citizens) to your bank at the beginning of the financial year. This prevents TDS deduction.

Is FD safer than mutual funds?

Yes, FDs carry almost no risk. Bank FDs up to ₹5 lakh are insured by DICGC. Mutual funds are market-linked and can lose value. However, FD returns may not beat inflation over the long term.

What is a tax-saving FD?

A 5-year FD that qualifies for Section 80C tax deduction up to ₹1.5 lakh per year. The lock-in period is 5 years with no premature withdrawal. Interest earned is still taxable.

Can NRIs open FDs in India?

Yes, NRIs can open NRE (tax-free in India) or NRO (taxable) fixed deposits. Interest rates and rules differ — check with your bank.

FD interest rates mentioned in this guide are approximate and subject to change. Always check the latest rates on your bank's official website before investing. Last updated: February 2026.