Fixed deposits are considered as the safest and highest yielding term deposit in India since they offer a substantial return on the invested amount without any risk. These investment schemes hold a major share in the annual returns of Indian financial institutions with an estimated 57.7% share during FY 2018-19.
With many individuals opting to invest in term deposits like fixed deposit accounts, it is important that customers know the different interest rates which are applicable to these investments.
Interest rates available on fixed deposits
The term deposit interest rates depend on numerous factors, ranging from tenor duration to age of the investor. Usually, financial institutions offer FD accounts to individuals above the age of 25 years.
Furthermore, investors should also understand that there are different types of interest pay-out options which also affect the rate of interest applied to an investment.
For example, while in the case of cumulative interests, the rate of interest is fixed at a yearly rate and the total sum (principal and interest) is disbursed only when the FD matures. Non-cumulative rates can be of four types. Investors can choose from monthly, quarterly, half-yearly and annual payment.
Customers should use FD maturity calculators to calculate the amount of revenue generated from different interest pay-out schemes. Additionally, they should also factor in the tenor duration which is a major determinant of the interest rate as well.
Usually, financial institutions allow investments starting from Rs. 25,000. The investment amount can go up to Rs. 5 Crore. The different types of customers and the rates of interest offered on fixed deposits by most financial institutions are discussed below.
For new customers
The cumulative rates of interest offered to new customers are listed below.
- For individuals considering to invest for a tenor ranging between 12 and 23 months, 7.60% rate of interest is applicable.
- In case an investor opts for a longer tenor in between 24 and 35 months, the rate of interest goes up to 7.90%.
- Any investor choosing the longest tenor for their investment which is more than 36 months can avail 8.10% rate of interest.
Customers considering to go for an investment with non-cumulative term deposit interest rates are eligible for the following rates. The interest pay-out options of monthly, quarterly, half-yearly and annual are mentioned below in the same chronology.
- For tenors which range in between 12 and 23 months, the applicable rates of interest are 7.35%, 7.39%, 7.46% and 7.60%.
- In case the tenor of investment goes above 24 months but is limited below 35, the rates of interest offered are 7.63%, 7.68%, 7.75% and 7.90%.
- For the highest possible tenor which exceeds 36 months, the rates are 7.81%, 7.87%, 7.94% and 8.10%.
For senior citizens
Fixed deposits are one of the best risk-free investment options that senior citizens can benefit from. They also enjoy higher rates of interest. The cumulative rates of interest are as follows.
- For tenors in between 12 and 23 months, the rate of interest offered is 7.85%.
- If the tenor goes up to duration between 24 and 35 months, the interest rate is 8.15%.
- In case the tenor is in longer than 36 months, a rate of 8.35% is offered.
For non-cumulative interest pay-outs, the following term deposit interest rates are applicable. They are mentioned in the order of monthly, quarterly, half-yearly and annual pay-out.
- Tenors in between 12 and 23 months have interest rates 7.58%, 7.63%, 7.70% and 7.85%.
- For any tenor that is between 24 and 35 months, 7.86%, 7.91%, 7.99% and 8.15% are offered as the interest rate.
- In case the tenor is beyond 36 months up to 60, interest rates are 8.05%, 8.10%, 8.18% and 8.35%.
For existing customers and employees
Existing customers and employees of the financial institutions are offered the underneath cumulative term deposit interest rates.
- For tenors in between 12 and 23 months, the rates are 7.70%.
- If the tenor is in between 24 and 35 months, the rates of interest are 8.00%.
- For tenors above 36 months, the rates of interest are 8.20%. Non-cumulative FDs also offer a substantial return, which is one of the reasons to invest in fixed deposits and benefits of FD.
- Tenors in between 12 and 23 months are offered 7.44%, 7.49%, 7.56% and 7.70% as interest rates.
- If the tenor goes up to a duration between 24 and 35 months, 7.72%, 7.77%, 7.85% and 8.00%.
- For tenors longer than 36 months investors can get rates of 7.91%, 7.96%, 8.04% and 8.20%.
It is crucial that investors consider all these rates of interest and use an FD maturity calculator to determine their return. This will help them plan their finances properly.