Fixed Deposit or Term Deposit is one of the most popular and secure financial instrument available in India. Fixed Deposit enables you to earn higher FD interest rates on your hard earned money by investing it for a specified tenure. It is considered as one of the safest investment options, which can get higher returns than savings account with no risk involved. Most of the banks and financial institutions provide savings account interest at 3.5 – 4% per annum. Whereas, fixed deposits can earn you interest up to 9% per annum but does not involve any risk.
With fixed deposit, you will get guaranteed returns on your investment made. While mutual funds and shares can fetch you more returns on your investments, but are considered to be moderately or highly risky form of investments. On the other hand, fixed deposit is the safest investment choice available in India and provides moderately high returns on investment as well. But, FD interest rates differ from one bank to another and vary for deposit tenure options and deposit amount as well. This makes it important to be aware of the best bank FD rates 2019 in India.
Here is a list of best bank FD rates 2019 offered by some of the major banks and small finance banks operating in India.
Best Bank FD Rates 2019
Bank | Rate of Interest* | Deposit Tenure | |
Regular Individuals | Senior Citizens | ||
Jana Small Finance Bank | 9.00% | 9.60% | 3 years |
Fincare Small Finance Bank | 9.00% | 9.50% | 24 months 1 day to 36 months |
Suryoday Small Finance Bank | 9.00% | 9.50% | 950 Days |
ESAF Small Finance Bank | 8.75% | 9.25% | 365 – 727 days |
Ujjivan Small Finance Bank | 8.30% | 8.30% | 1 year to 2 years |
IndusInd Bank | 8.00% | 8.50% | 1 years to 1 years 2 months |
Yes Bank | 7.50% | 8.00% | 12 months 10 days to 12 months 20 days |
DCB Bank | 7.40% | 7.90% | 12 months 1 day to less than 15 months |
Standard Chartered Bank | 7.40% | 7.90% | 1 year – 375 days |
Axis Bank | 7.30% | 7.95% | 1 year < 1 year 5 days |
*FD Interest Rates are subject to frequent change without any prior information.
Things to Keep in Mind before Investing in a Fixed Deposit
Following are some important points that you should keep in mind before investing in a fixed deposit:
- Compare FD interest rates
When you have some funds that you think you should invest, you can consider investing in a fixed deposit account. But, you should compare different banks and look for the best bank FD rates 2019 in India. After comparing different banks and financial institutions, you should invest in the one which pays the highest FD interest rates for the potential deposit amount and tenure you want to invest.
- Split your money
To diversify your portfolio and earn more interest on the deposit, you can opt to make investments in multiple banks fixed deposits. The primary and the most important of benefit of splitting the money into multiple deposits come when you are in any urgency of funds. At that point of time, you can break the fixed deposit for the amount required or one of your deposits to fulfil your need. By this, you will only be charged premature penalty for the only deposit you withdraw before its tenure. This way your other fixed deposits will continue to earn its interest on the invested amount.
- Invest in multiple FD accounts—with different tenures
Fixed deposit interest rates differ with the deposit amount and tenure that you wish to invest your funds for. So, you can also opt to invest in different fixed deposit accounts with different tenure options to maximise the returns and affecting the liquidity as less as possible. This also enables you as an investor to reinvest in a fixed deposit after maturity and fetch the best bank FD rates 2019.
- Tax liability on Fixed Deposits
Before investing in a fixed deposit, you must be aware of the fact that any interest earned on fixed deposit is taxable as per the income tax slab you fall in. Also, any FD interest earned above Rs. 10000 will be TDS deducted. As per the Budget 2019, this threshold limit has been increased from Rs. 10000 to Rs. 40000 per annum. So, to save yourself from taxes you should invest in a tax saver FD and invest keeping in mind the returns.
- Tax Saving FD
To claim deduction for the investment made, you can invest in a tax saving FD. By investing in a tax saver fixed deposit, you can claim a deduction up to Rs. 1.5 lakh in a financial year under section 80C of the Income Tax Act, 1961. Tax saver FD comes with a lock in period of 5 years which means you cannot withdraw your fixed deposit before the specified deposit tenure or lock in period. This makes it of extreme importance to keep in mind that you will not be able to use that amount before the stipulated deposit tenure.
- Premature Withdrawals
If you want to invest in a fixed deposit, then you should be aware of the premature withdrawal facility. Also, you stay aware of the premature withdrawal penalty that they charge. But, you should consider withdrawing a fixed deposit before its deposit tenure only if you need those funds to cater some emergency. If you withdraw your fixed deposit before maturity, you will be required to pay a premature penalty and your FD interest rates will differ as per the tenure that the fixed deposit has been kept for.
- Reinvestment of Interest
Most of the banks also allow reinvestment of interest in the fixed deposit. Under reinvestment scheme, you can reinvest the FD interest earned in your fixed deposit that will increase the principal amount of your deposit and help you in getting higher returns with the power of compounding.
Conclusion
FD interest rates vary for different deposit tenure and amount. So, before checking the best bank FD rates 2019, you should know about the deposit amount that you want to invest and the tenure that you want to invest for. On the basis of this only, you should decide best bank for fixed deposit in India.
