HomeInvestmentBank FD Rate 2018 - Best Fixed Deposit Rates of Banks

Bank FD Rate 2018 – Best Fixed Deposit Rates of Banks

bank FD

Bank FD is one of the most popular and trusted investment options in India. It is probably a first choice for the fixed income conservative investors. Fixed Deposit offers multiple benefits including guaranteed return, wide range of maturity options and liquidity in terms of premature withdrawal.

A fixed deposit is also known as a term deposit. It is treated as one of the best investment options by conservative investors. If you are planning to invest in Bank FD and looking for Bank FD Rate in 2018, here are some of the Best Fixed Deposit Rates offered by banks.

Bank FD Rate 2018 – Best Fixed Deposit Rates of Banks

BankTenureTax Saver FD
6 months (%)1 Year (%)2 Years (%)5 Years    (%)
State Bank of India6.356.46.66.75
HDFC Bank5.756.8576
ICICI Bank66.66.756.5
Axis Bank6.
Kotak Mahindra Bank6.
HSBC Bank555NA
Standard Chartered Bank76.96.56.5

Note – Above Bank FD Rate is applicable for the amount less than Rs.1 Cr.

Source – Websites of respective banks.

Also Read – Fixed Deposit or Fixed Maturity Plan (FMP)

How to Find Latest Bank FD Interest Rates?

There are three ways to find out latest bank FD interest rates. First is visiting bank branch physically to know about latest applicable interest rates. The second method is visiting websites of the respective and making a list of applicable interest rates. If you are not comfortable with both these methods, I suggest you use the third method of visiting aggregator website that collects information about fixed deposit and displays them.

One such aggregator website for fixed deposit is policybazaar that collects information of 32 bank FD’s and allows you to calculate maturity value. It also offers a comparison of various bank FD’s.

  • In order to use this facility kindly visit – https://www.policybazaar.com/fixed-deposit/
  • Select a bank from the drop-down list.
  • Provide required inputs like period and investment amount.
  • Once done press calculate button. It will calculate and provide you maturity value.
  • It also includes senior citizen option.

bank FD

Types of Fixed Deposits

Bank offers different types of fixed deposits.

  1. Regular short term and long term FD

Short term FD has a tenure of 7 days to 1 year. Long-term FD has tenure of 1 year to 5 years. The rate of interest in these types of FD is pre-determine, but higher than saving bank account.

  1. Tax Saving FD

Tax Saving FD is fixed deposit with fix tenure of 5 years. One can avail 80C income tax exemption by investing in Tax Saving FDs. Tax Saver FD comes with a lock-in period of 5 years. This means you cannot withdraw money from FD till maturity.

  1. Senior Citizen FD

Senior Citizen FD is for people with age 60 years and above. The interest rate applicable on these type of FD is higher compared to normal FDs.

Also Read – Bank Fixed Deposits Vs Investment in Same Bank Share

FD interest rates: Things you should know

  • Fixed deposit interest rates vary from bank to bank and it depends on fund available with bank and lot of other parameters.
  • The interest rate remains fixed throughout the tenure of FD. However, it is decided when you purchase fixed deposit.
  • The interest rates are revised by bank time to time. You will find rate difference between public sector bank and private sector banks.
  • A Senior citizen gets a higher fixed deposit interest rate when compared to the general public.
  • Company FD offers higher interest rate compared to Bank FD. However, it is risky to invest in company FD.

Factors to consider while investing in Bank FD

You should consider following factors before investing your hard earned money in Bank FD.

Interest rates

The applicable interest rate is one of the big factors for the consideration while investing in bank FD.  While making a comparison you may come across co-operative banks offering higher rate of interest. Don’t get attracted towards bank offering very high returns otherwise, you will end- up making a risky investment. Select a bank with a stable financial condition and good reputation.

Tenure and Lock-in period

The second important factor to consider is tenure. It is a period for which you are agree to put your money. You should carefully select a tenure based on your financial goal. If you are opting for tax saver FD, it comes with a mandatory lock-in period of 5 years. You will not able to withdraw your money till 5 years in case of tax saver FD.

Premature withdrawal

Most of the bank provide a facility the of premature withdrawal. However, penalty applicable on withdrawal varies from bank to bank. If liquidity of fund matters to you, check if premature withdrawals are allowed or not and on what condition.

Loan against FD

Most of the banks offer the facility of a loan against FD. This facility is useful if you are in need of money in an emergency situation, where you are not interested to break your FD. You should consider interest rate applicable on loan offered by the bank against FD.

Tax Implication

The interest earned on Bank FD is subject to Income tax. TDS is applicable on interest amount if it exceeds Rs.10000 per year (non-senior citizen).  For senior citizen this limit is Rs.50000.

Therefore, when you invest in bank FDs also assess the post-tax returns. If you are in higher tax slab it is not advisable to invest in FD.

If you don’t have any other income except interest income or if your total income is less than taxable limit you can submit Form 15G (non-senior citizen) or 15H (senior citizen) to avoid TDS on FD.

Inflation and Tax Slab

A most important factor to consider while investing in bank FD is Inflation.  Inflation is an erosion of the value of money over the time period. The average inflation rate in India is 4.88% (2018). Bank FD gives returns below inflation.

Suppose you take FD with highest interest rate 7% and you are in tax bracket of 30%. A post-tax return would be calculated as follow.

Post Tax Return = 7 – (7*30.9/100) = 4.83%

If you are in tax slab of 20% or 10% your post tax return from bank FD will be slightly higher.

Also Read – Credit card against fixed deposit – Good option?

Conclusion –

Bank FD is an investment option for the risk-averse investor, who want to park money for the short-term for earning a small return. If you are ok with taking a moderate risk and want to earn a higher return, you should go for other tax efficient investment option like PPF or Mutual Fund.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.