Highest FD interest rates in SBI, HDFC, ICICI, Axis and Kotak Bank; Which duration to opt for and why?

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Updated: September 30, 2018 9:08:53 AM

Interest rates on FDs are going up now. And with the falling rupee and rising crude prices, this trend is likely to continue for some more time. What should you do?

fixed deposits, FDs, fixed deposit rates, fixed deposit interest rate, fixed deposit calculator, fixed deposit in sbi, fixed deposit in hdfc, fixed deposit in ICICI, axis bank, kotak bankFixed deposit interest rates: It may be noted that the interest rates of fixed deposits vary widely depending on banks and their fixed deposit tenure.

Interest rates on fixed deposits – as well as on many other financial products like home and car loans – are going up for some time now. And with the falling rupee and rising crude prices, this trend is all set to continue for some more time. This definitely seems to be good news for investors who are looking to park their money in FDs to take advantage of this rising interest rate regime.

According to financial planners, the best strategy for investors in the current scenario would be to lock their money in FDs with the highest possible interest rates and the longest-possible duration right away. That is because in a rising interest rate regime, banks usually provide higher interest rates on longer-duration fixed deposits.  Also, waiting for the rates to further go up may not be a wise move as nobody is sure when the rates will rise again.

It may be noted that the interest rates of fixed deposits vary widely depending on banks and their fixed deposit tenure. Currently, most small finance banks are offering highest card rates of 8-9% p.a. on their fixed deposits while major commercial banks are offering highest card rates of 6.75-7.50% p.a. The highest interest rates offered by smaller commercial banks range between 7.5% and 8.25% p.a.

“Hence, like all other financial products, investors should shop for the best FD rates based on their liquidity requirements and financial goals. However, depositors should prefer the highest card rates available with shorter maturities, preferably of up to 2 years. As our economy is in the midst of a rising interest rate regime, doing so might allow you to reinvest your fixed deposit maturity proceeds at higher interest rates,” says Naveen Kukreja, CEO & Co-founder, Paisabazaar.com.

Also, avoid the option of automatic reinvestment while booking your fixed deposits. As banks frequently change their fixed deposit card rates for different tenures, opting for the automatic reinvestment option may land you with sub-optimal interest rates.

Whatever be the case, investing in fixed deposits with the highest possible interest rates will be beneficial for investors. Here’s a look at the highest FD rates offered by different banks:

Top FD rates offered by small finance banks
Bank NameHighest interest rate slab
TenureRegular interest rateInterest rate for Senior citizens
Fincare Small Finance Bank24 months 1 day to 36 months9.00%9.50%
ESAF Small Finance Bank365 days to 727 days8.75%9.25%
Suryoday Small Finance BankMore than 2 years to 3 years8.75%9.00%
Ujjivan small finance Bank799 days8.50%9.00%
Jana Small finance BankMore than 2 years up to 3 years 8.50%9.10%
Top FD rates offered by major banks
Bank NameHighest available interest rate
TenureRegular interest rateInterest rate for Senior citizens
Axis Bank13 months to less than 14 months7.30%7.95%
ICICI Bank2 years 1 day upto 5 years 7.25%7.75%
HDFC Bank1 year to 2 years7.25%7.75%
State Bank of India5 years to 10 years6.85%7.35%
Kotak Bank390 days to less than 2 years7.50%8.00%

(Source: Paisabazaar.com)

Thus, compare the interest rates and go for the best one, depending upon your requirement and risk appetite!

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