Are you planning an FD? Here are the top 10 banks that offer the highest interest on your fixed deposits

Fixed deposits (FDs) are a safe investment option that allows you to earn interest on a lump sum over a fixed period. Many people prefer to lock their savings in a fixed deposit, which acts as a precautionary fund for planned expenses. The interest rate is determined at the time of opening the deposit and depends on the period for which the amount is locked. Fixed deposits usually offer higher interest rates than savings accounts. Additionally, senior citizens are often eligible for higher interest rates. Longer-term deposits usually offer higher interest rates, while shorter-term deposits offer lower interest.

Banks offering higher interest rates

Here are the top banks offering high interest rates on fixed deposits, with higher rates applicable on longer-term deposits. The latest interest rates offered by top banks for tenures ranging from seven days to 10 years till December 2024 are listed in the table below:

HDFC Bank

This private bank offers 7.4 percent interest on its fixed deposits with a tenure of 5 years for regular depositors. Senior citizens are entitled to get 7.9 percent on this tenure.

Kotak Mahindra Bank

Kotak Mahindra Bank offers the highest interest rate, on par with HDFC. The private lender offers 7.4 per cent to general citizens on fixed deposits with tenures of 390 to 391 days. Senior citizens are offered an additional 50 basis points i.e. 7.9 per cent. These interest rates came into effect on June 14, 2024.

Federal Bank

This bank offers interest of 7.4 per cent and 7.9 per cent to general citizens and senior citizens respectively on fixed deposits with tenures of 777 days.

State Bank of India (SBI)

The country's largest bank offers 7 percent and 7.5 percent interest to general and senior citizens on FDs with tenures between 2-3 years. These rates came into effect on June 15, 2024.

Karnataka Bank

Karnataka Bank offers interest at the rate of 7.50 percent to general people and 7.75 percent to senior citizens.

Bank of Baroda

As per the rates announced on October 14 this year, BOB offers 7.3 percent and 7.8 percent interest rates on FDs of 400 days duration.

Union Bank of India

This government bank has revised its interest rates on FDs. It offers 7.3 percent interest rate to general citizens on fixed deposits of 456 days duration. 50 basis points are given extra for senior citizens.

RBL Bank

According to RBL Bank, it offers 8 per cent interest rate on normal fixed deposits and 8.50 per cent for senior citizens.

Bandhan Bank

Bandhan Bank offers 8.05 per cent interest rate for general people and 8.55 per cent for senior citizens.

IndusInd Bank

IndusInd Bank is said to offer 7.99 per cent and 8.49 per cent interest rate for general and senior citizens respectively.

Other attractions of FD

The Reserve Bank of India (RBI) has issued revised guidelines for fixed deposits (FDs) with non-banking financial companies (NBFCs) and housing finance firms. Key highlights include:

Penalty-free withdrawal for small deposits

FD holders can withdraw amounts less than ₹10,000 before maturity without any penalty.

Critical Illness Clause

Individuals suffering from critical illnesses are allowed to withdraw the entire FD amount before maturity.

Premature Withdrawal of Fixed Deposit

Fixed deposits offer an investor a fixed rate of interest on a lump sum amount deposited with the bank for a fixed period. The rate can be determined using a fixed deposit return calculator. Premature fixed deposit withdrawal means that the investor withdraws the fixed deposit before the maturity date.

Penalties

It should be noted that premature fixed deposit withdrawals usually incur a penalty. The penalty charges vary from bank to bank and are usually a reduction in the interest rate. The penalty on premature withdrawal of fixed deposits can range between 0.5% to 1%.