How an FD works
You deposit a lump sum for a fixed term — from 7 days to 10 years — at a rate fixed on the day you open it. Interest is either paid out (monthly, quarterly or yearly) or reinvested (cumulative), in which case most banks compound it quarterly. Use the calculator above for your own numbers.
Is my FD safe?
Deposits in banks — public, private, small finance, foreign, regional rural and co-operative banks — are insured by the DICGC up to ₹5 lakh per depositor per bank, principal and interest together. Above that, your safety depends on the bank. Spreading large sums across banks keeps each within the cover.
Company FDs (deposits with NBFCs and housing finance companies) are not DICGC-insured. They can pay more, but check the credit rating, and check that the NBFC is allowed to take deposits — our RBI NBFC check shows the public-deposit permission from RBI's list.
What decides your rate
- The bank — small finance banks usually pay more than large banks, because they need deposits more.
- The tenure — rates are not higher for every longer term; banks often pay the most for a particular band, such as 1–3 years.
- Your age — most banks pay senior citizens a little more.
- The interest cycle — when the RBI raises the repo rate, banks tend to raise deposit rates over the following weeks; when it cuts, they lower them. Locking a longer FD before cuts keeps the higher rate.
See FD interest rates for how to compare offers, and the government's own rates in Post Office FD rates.
Tax and TDS
FD interest is added to your income and taxed at your slab rate, every year — even on a cumulative FD where you receive nothing until maturity. The bank deducts 10% TDS if your interest from it crosses ₹50,000 in a year (₹1 lakh for senior citizens), or 20% without PAN. If your total income is below the taxable limit, give the bank the no-TDS self-declaration at the start of the year.
Government rates for comparison
| Post Office deposit | Rate, Oct–Dec 2026 |
|---|---|
| 1-year time deposit | 6.9% |
| 2-year time deposit | 7.0% |
| 3-year time deposit | 7.1% |
| 5-year time deposit | 7.5% |
| 5-year recurring deposit | 6.7% |
| Senior Citizens Savings Scheme | 8.2% |
Breaking an FD
Most banks let you close early with a penalty, usually 0.5–1% off the rate for the period you actually stayed. If you need money for a short time, a loan against your FD can cost less than breaking it.
For general information only, not investment advice or a recommendation. Oxon Fintech is a loan facilitation platform, not a SEBI-registered investment adviser, bank or mutual fund distributor, and does not sell bonds, deposits or funds. Rates and rules are as checked on the date above; confirm with the issuer, bank or fund house before investing. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.