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What is Fixed Deposit (FD)?

Fixed Deposit is a secure investment option offered by banks and financial institutions where you deposit a lump sum for a fixed period at a predetermined interest rate. The interest is guaranteed regardless of market conditions, making it a low-risk investment.

How is FD Interest Calculated?

FD maturity amount is calculated using compound interest formula:

Where: A = Maturity Amount, P = Principal, r = Annual interest rate, n = Tenure in years

Best FD Rates (2024 Average)

• Public Sector Banks: 6.5% - 7.5% for 1-5 year tenure
• Private Banks: 7.0% - 8.0% for 1-5 year tenure
• Small Finance Banks: 8.0% - 9.0% (higher risk)
• Senior Citizens: Additional 0.25% - 0.75% on regular rates

FD vs Other Investment Options

• FD vs SIP: FD offers guaranteed returns but lower than equity mutual funds over long term
• FD vs RD: FD requires lump sum; RD allows monthly deposits
• FD vs Savings: FD gives 2-3% more interest but money is locked
• Tax-Saver FD: 5-year lock-in with 80C deduction up to ₹1.5L

Tips to Maximize FD Returns

• Ladder your FDs — invest in multiple FDs with different maturity dates
• Choose quarterly or monthly interest payout for regular income
• Avoid premature withdrawal as it attracts 1% penalty
• Compare rates — small finance banks often offer higher rates
• For amounts over ₹5L, split into multiple banks for deposit insurance