Best FD Interest Rates in India 2026

1. FD Rates Comparison — Top Banks (2026)

Interest rates for general public (below ₹3 crore deposits). Rates are indicative and subject to change — verify with your bank before investing.

Bank	1 Year	2 Years	3 Years	5 Years
SBI	6.80%	7.00%	6.75%	6.50%
HDFC Bank	6.60%	7.00%	7.00%	7.00%
ICICI Bank	6.70%	7.00%	7.00%	7.00%
Axis Bank	6.70%	7.00%	7.10%	7.00%
Kotak Mahindra	6.75%	7.10%	7.10%	6.50%
Bank of Baroda	6.85%	7.00%	7.05%	6.50%
PNB	6.80%	7.00%	7.00%	6.50%
Canara Bank	6.85%	7.00%	7.00%	6.50%
IDBI Bank	6.75%	6.75%	7.00%	6.50%
IndusInd Bank	7.25%	7.25%	7.50%	7.25%

            Note: Rates are approximate as of early 2026. Banks revise FD rates frequently based on RBI repo rate changes. Always check the latest rates on the bank's website before investing.
        

Calculate Your FD Returns →

2. Senior Citizen FD Rates

Senior citizens (age 60+) get an additional 0.25-0.75% interest on FDs across most banks. Super senior citizens (80+) may get an extra 0.25% at select banks.

Bank	Extra Rate	1-Year (Senior)	3-Year (Senior)
SBI	+0.50%	7.30%	7.25%
HDFC Bank	+0.50%	7.10%	7.50%
ICICI Bank	+0.50%	7.20%	7.50%
Axis Bank	+0.50%	7.20%	7.60%
Post Office	—	6.90%	7.00%

            Section 80TTB: Senior citizens can claim up to ₹50,000 deduction on interest income from FDs, savings accounts, and post office deposits (old regime). Regular taxpayers get only ₹10,000 (Section 80TTA on savings interest only).
        

3. Small Finance Bank Rates

Small finance banks consistently offer 0.75-1.5% higher rates than large banks. Deposits up to ₹5 lakh are covered by DICGC insurance, same as any other bank.

Small Finance Bank	1 Year	2 Years	3 Years
Unity SFB	8.00%	8.00%	7.75%
Ujjivan SFB	7.75%	7.75%	7.50%
AU SFB	7.50%	7.50%	7.50%
Equitas SFB	7.75%	7.50%	7.25%
Suryoday SFB	8.25%	8.00%	7.75%

            Pro tip: Split your FD across multiple banks to stay within the ₹5 lakh DICGC insurance limit per bank while earning higher rates from small finance banks.
        

4. How FD Interest is Calculated

Banks calculate FD interest using quarterly compounding (most common). The formula:

            Maturity Amount = P × (1 + r/n)n×t

            P = Principal | r = Annual interest rate | n = Compounding frequency (4 for quarterly) | t = Tenure in years

Example: ₹5,00,000 FD at 7% for 3 years (quarterly compounding)

Maturity Amount = 5,00,000 × (1 + 0.07/4)^4×3
= 5,00,000 × (1.0175)¹²
= 5,00,000 × 1.2314
= ₹6,15,700
Interest earned: ₹1,15,700

Cumulative vs Non-Cumulative FD

Cumulative: Interest is reinvested and paid at maturity. Higher effective returns due to compounding. Best for wealth creation.
Non-Cumulative: Interest paid monthly/quarterly/half-yearly. Best for regular income needs (retirees).

FD Calculator (Cumulative & Non-Cumulative) →

5. Tax Saver FD — Section 80C

Tax-saver FDs qualify for ₹1,50,000 deduction under Section 80C (old regime only). Key features:

Lock-in period: 5 years (no premature withdrawal allowed)
Interest rate: Same as regular 5-year FD rate of the bank
Maximum investment: No upper limit, but 80C deduction capped at ₹1.5 lakh
Nomination: Available (mandatory to fill)
Joint holding: Allowed, but 80C benefit only for first holder

            Tax saver FD vs ELSS: ELSS mutual funds also qualify under 80C but with only a 3-year lock-in and historically 10-15% returns vs 6.5-7% for FDs. ELSS is better for higher returns; tax saver FD is better for guaranteed returns.
        

6. Tax on FD Interest

FD interest is fully taxable as "Income from Other Sources" at your applicable income tax slab rate.

TDS on FD Interest

TDS threshold: 10% TDS if total FD interest exceeds ₹40,000/year (₹50,000 for senior citizens)
No PAN: 20% TDS deducted if PAN is not linked
Form 15G/15H: Submit to avoid TDS if your total income is below taxable limit (15G for general, 15H for senior citizens)

Effective return after tax

Tax Bracket	FD Rate	Effective Return	Real Return (after 5% inflation)
No tax (under ₹5L)	7.00%	7.00%	2.00%
20% slab	7.00%	5.60%	0.60%
30% slab	7.00%	4.90%	−0.10%
30% + surcharge	7.00%	4.55%	−0.45%

            Key insight: For taxpayers in the 30% bracket, FD returns barely beat inflation. Consider debt mutual funds (indexed after 3 years), PPF (tax-free returns), or NPS for tax-efficient fixed-income alternatives.
        

7. Types of Fixed Deposits

Regular FD — Standard fixed deposit, premature withdrawal allowed with penalty (0.5-1%)
Tax Saver FD — 5-year lock-in, 80C benefit, no premature withdrawal
Senior Citizen FD — Higher rates, additional tax benefit under 80TTB
Flexi FD — Linked to savings account, auto-sweep above a threshold, partial withdrawal possible
Corporate FD — Higher rates (8-9%) but higher risk, not DICGC insured. Stick to AAA/AA+ rated companies.
Recurring Deposit (RD) — Monthly fixed investments like SIP but with guaranteed returns
NRE/NRO FD — For NRIs. NRE FD interest is tax-free in India; NRO FD is taxable.

RD Calculator →

8. FD vs Other Investments

Parameter	FD	PPF	Debt MF	ELSS MF	RD
Returns	6.5-7.5%	7.1%	6-8%	10-15%	6.5-7%
Risk	Zero	Zero	Low	Market	Zero
Lock-in	Flexible	15 years	None	3 years	Flexible
Tax on returns	Slab rate	Tax-free	Slab rate	12.5% LTCG	Slab rate
80C benefit	5-yr FD	Yes	No	Yes	No
Liquidity	Good	Poor	Excellent	3-yr lock	Moderate
Best for	Safety	Long-term safe	Short-term	Tax + Growth	Monthly saving

            Recommendation: Use FDs for emergency fund (3-6 months expenses in flexi FD) and short-term goals (< 2 years). For longer horizons, PPF, mutual funds, or NPS offer better tax-adjusted returns.
        

PPF Calculator → SIP Calculator → Compound Interest Calculator →

9. Tips to Maximise FD Returns

Ladder your FDs — Instead of one large FD, split into multiple FDs with different maturities (1, 2, 3, 5 years). This ensures regular liquidity and protects against rate changes.
Compare small finance banks — They offer 0.75-1.5% higher rates. Split deposits to stay within ₹5 lakh DICGC limit per bank.
Choose cumulative FD — Unless you need regular income, cumulative FDs earn more due to quarterly compounding.
Time your FD before rate cuts — When RBI signals rate cuts, lock in current rates with longer-term FDs.
Use sweep-in/flexi FD — Get FD-like returns on your savings account balance above a threshold.
Submit Form 15G/15H — If your total income is below taxable limit, avoid unnecessary TDS deduction.
Senior citizens: Check super senior rates — Many banks offer additional 0.25% for ages 80+ over the senior citizen rate.
Don't break FD prematurely — Early withdrawal attracts 0.5-1% penalty. Plan maturities to match your cash flow needs.

10. Frequently Asked Questions

Is FD interest taxable?

Yes, FD interest is fully taxable at your income tax slab rate. TDS of 10% is deducted if annual interest exceeds ₹40,000 (₹50,000 for senior citizens).

What happens if a bank fails?

DICGC (Deposit Insurance) covers up to ₹5 lakh per depositor per bank (including principal + interest across all accounts). Keep deposits within this limit at each bank for full protection.

Can I get a loan against FD?

Yes, most banks offer loans up to 90% of FD value at 1-2% above the FD rate. This is cheaper than personal loans and doesn't require breaking the FD.

Which is better — monthly or quarterly interest payout?

Monthly payout gives more frequent cash flow but slightly lower effective yield than quarterly (since quarterly benefits from compounding within the quarter). Choose based on your income needs.

Are post office FDs better than bank FDs?

Post office term deposits are backed by the government (sovereign guarantee), making them slightly safer. However, rates are generally similar to SBI. The 5-year post office TD qualifies for 80C deduction.

Calculate Your FD Returns

Use our free FD calculator to compare maturity amounts across different banks, rates, and tenures.

FD Calculator → RD Calculator → Compound Interest Calculator → SIP vs FD Guide →