Fixed deposits (FDs) provide a secure way to preserve the principal amount while ensuring guaranteed returns. A significant advantage of FDs is the flexibility to select terms that align with your financial needs, allowing you to access your funds as required. Additionally, you have the option to withdraw the funds along with accrued interest and reinvest them whenever opportunities arise to secure a higher interest rate.
Short and medium-term FDs generally span from a few weeks to a few years, appealing to investors who prioritize liquidity while still achieving better returns compared to a traditional savings account. It is essential to explore the advantages of short and medium-term FDs and the appropriate steps to take.
Also Read: Gold Loan Frauds: Crucial red flags and how to stay protected
In exchange, the institution provides a fixed interest rate that is typically higher than that of standard savings accounts but lower than that of long-term FDs. The interest accrued can either be disbursed at regular intervals or compounded, based on the investor’s choice and the policies of the bank.
A significant benefit of short-term fixed deposits is their liquidity. Investors have the opportunity to allocate their funds for a brief duration without committing them for extended periods. This feature is especially advantageous for individuals who foresee a requirement for funds in the near term.
Furthermore, fixed deposits are regarded as one of the most secure investment avenues, particularly when held with reputable banking institutions. They are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance, which covers amounts up to Rs 5 lakh per bank for each depositor, thereby providing an extra layer of protection.
Fixed deposits provide guaranteed returns, distinguishing them from market-linked instruments and making them an ideal choice for conservative investors focused on preserving their capital. In 2024, the interest rates for short and mid-term fixed deposits vary from 4.5% to 8.25% per annum, contingent upon the bank and the duration of the deposit. To entice depositors, small finance banks frequently offer more competitive interest rates than their larger counterparts.
Should you require funds in the short to medium term, these FDs can provide you with interest earnings while allowing access to your liquidity during the chosen period. Additionally, they offer the possibility of reinvesting your funds if necessary. The following table presents a comparison of FD interest rates of India’s leading banks, including the State Bank of India, BoB, BoI, PNB, HDFC Bank, ICICI Bank, and Axis Bank. You may review this information to determine the option that best aligns with your investment objectives.
| Fixed Deposits Interest Rates (%) | |||||
| Bank | <1 year | 1 to 2 years | 2 to 3 years | ||
| Bank of Maharashtra | 6.9 | 7.15 | 7.25 | ||
| Bank of Baroda | 7.15 | 7.3 | 7.15 | ||
| Bank of India | 6 | 7.25 | 6.75 | ||
| Canara Bank | 6.25 | 7.25 | 6.85 | ||
| Central Bank of India | 6.25 | 7.45 | 6.5 | ||
| Indian Bank | 7.05 | 7.25 | 6.7 | ||
| Indian Overseas Bank | 5.75 | 7.3 | 6.8 | ||
| Punjab National Bank | 7.05 | 7.25 | 7 | ||
| Punjab & Sind Bank | 7.15 | 7.3 | 6.3 | ||
| State Bank of India | 6.5 | 7.25* | 7 | ||
| UCO Bank | 5.5 | 7.05 | 6.3 | ||
| Union Bank | 7.4 | 7.25 | 6.7 | ||
| Axis Bank | 6 | 7.2 | 7.1 | ||
| Bandhan Bank | 4.5 | 8 | 7.25 | ||
| Catholic Syrian | 7.25 | 7.75 | 7.1 | ||
| City Union Bank | 7.5 | 7 | 6.5 | ||
| DCB Bank | 7.25 | 8.05 | 7.55 | ||
| Dhanlaxmi Bank | 5 | 7.25 | 6.5 | ||
| Federal Bank | 6.5 | 7.35 | 7.4 | ||
| HDFC Bank | 6 | 7.25 | 7.35 | ||
| ICICI Bank | 6 | 7.25 | 7 | ||
| IDBI Bank | 7.05 | 7.35 | 7 | ||
| IDFC First Bank | 5.75 | 7.75 | 7.25 | ||
| IndusInd Bank | 6.5 | 7.75 | 7.25 | ||
| J & K Bank | 6.25 | 7 | 7 | ||
| Karnataka Bank | 6.75 | 7.5 | 6.5 | ||
| Kotak Bank | 7 | 7.4 | 7.15 | ||
| Karur Vysya Bank | 7.4 | 7.5 | 7.6 | ||
| RBL Bank | 6.05 | 8.1 | 7.5 | ||
| South Indian Bank | 5 | 7.25 | 7 | ||
| Tamilnad Mercantile Bank | 6 | 7.5 | 6.75 | ||
| TNSC Bank | 6.75 | 7.75 | 6.75 | ||
| Yes Bank | 6.35 | 8 | 7.25 | ||
| AU Small Finance Bank | 7.25 | 8 | 7.5 | ||
| Equitas Small Finance Bank | 6.25 | 8.5 | 8.25 | ||
| ESAF Small Finance Bank | 6 | 8.25 | 8.25 | ||
| Jana Small Finance Bank | 8 | 8.25 | 8.25 | ||
| Ujjivan Small Finance Bank | 7 | 8.25 | 7.75 | ||
| Data as on respective banks’ website on 06 Sep 2024; For each year range, the maximum offered interest rate is considered; interest rate is for a normal fixed deposit amount below Rs 1 crore. Compiled by BankBazaar.com. | |||||
