FD rates vary significantly across banks and tenures. Here's the complete picture for the most popular tenures:
| Bank | 1 Year | 2 Years | 3 Years | 5 Years | Senior (+) |
|---|---|---|---|---|---|
| SBI | 6.8% | 7.0% | 6.8% | 6.5% | +0.5% |
| HDFC Bank | 6.6% | 7.0% | 7.0% | 7.0% | +0.5% |
| ICICI Bank | 6.7% | 7.0% | 7.1% | 7.0% | +0.5% |
| Axis Bank | 6.7% | 7.1% | 7.25% | 7.0% | +0.5% |
| Kotak Mahindra | 7.1% | 7.2% | 7.6% | 6.2% | +0.5% |
| Post Office (POTD) | 6.9% | 7.0% | 7.1% | 7.5% | Same |
Rates indicative as of Q1 FY 2025-26. Verify with bank before investing.
On a 3-year FD, Kotak offers the best rate at 7.6%. For 5-year, Post Office at 7.5% beats all private banks. The difference matters — ₹1 lakh at Kotak 7.6% for 3 years gives ₹25,017 in interest vs ₹22,099 at SBI 6.8% — a difference of ₹2,918 on the same investment.
Enter any amount, choose your bank's rate, tenure and compounding frequency. See maturity, TDS and post-tax returns instantly.
Open FD Calculator →This is what most FD comparison articles skip. The headline rate means nothing until you account for tax. FD interest is fully taxable as "Income from Other Sources" at your income slab rate.
Here's what ₹1 lakh at 7% for 3 years actually nets you across different tax slabs:
A person in the 30% slab putting ₹1 lakh in a 7% FD for 3 years takes home only ₹16,201 in net interest — an effective post-tax return of 5.11% per year. The bank advertises 7%. You earn 5.11%. That gap widens with larger amounts and longer tenures.
If your FD interest from a single bank exceeds ₹40,000 in a financial year (₹50,000 for senior citizens), the bank deducts TDS at 10% before crediting interest. TDS is not your final tax — it's an advance. At filing time you pay the balance or claim a refund depending on your slab. Submit Form 15G (below 60) or Form 15H (senior citizen) at the start of each year if your total income is below ₹3 lakhs — this stops TDS deduction entirely.
At face value FD at 7% looks close to PPF at 7.1%. In reality they're not even close for anyone paying tax.
| Feature | FD at 7% | PPF at 7.1% |
|---|---|---|
| Interest rate | 7.0% | 7.1% |
| Tax on interest | At slab rate | Zero — 100% exempt |
| Effective return (30% slab) | 4.9% | 7.1% |
| 80C deduction | Only 5-yr Tax Saver FD | Every year (₹1.5L) |
| Lock-in | Flexible (penalty on break) | 15 years |
| Partial withdrawal | Yes (with penalty) | From Year 7 |
| Government guarantee | DICGC up to ₹5L | Sovereign — unlimited |
For a 30% slab taxpayer, PPF at 7.1% delivers 7.1% post-tax. FD at 7% delivers 4.9% post-tax. That 2.2 percentage point difference on ₹10 lakhs over 15 years is the difference between a ₹28.6L corpus (FD post-tax) and a ₹40.7L corpus (PPF). Same money. Same period. ₹12.1 lakhs difference — just from tax treatment.
The only valid reasons to choose FD over PPF: you need the money within 15 years, you've already maxed your PPF at ₹1.5L, or you're in the 0% tax slab where the tax advantage disappears.
Max PPF first (₹1.5L/year — guaranteed 7.1% tax-free + 80C benefit). Then park remaining short-to-medium term savings in FD. Keep 6 months of expenses in FD as emergency fund — liquid, low risk. Everything else goes into equity SIP for long-term wealth above inflation.
Most Indian bank FDs compound quarterly. But it's worth understanding how much the compounding frequency affects your returns on the same nominal rate:
| Frequency | ₹1L at 7% — 3 Years | Interest Earned | Effective Annual Rate |
|---|---|---|---|
| Yearly | ₹1,22,504 | ₹22,504 | 7.00% |
| Half-Yearly | ₹1,22,987 | ₹22,987 | 7.12% |
| Quarterly (Standard) | ₹1,23,144 | ₹23,144 | 7.19% |
| Monthly | ₹1,23,300 | ₹23,300 | 7.23% |
The difference between yearly and monthly compounding on ₹1 lakh at 7% for 3 years is ₹796. On ₹10 lakhs it's ₹7,960. Not life-changing but worth knowing — always prefer quarterly or monthly compounding when given a choice.
Monthly payout FDs are popular with retirees needing regular income. The trade-off: banks offer slightly lower rates on monthly payout FDs — typically 0.1% to 0.25% lower than cumulative FDs — because they're paying you interest throughout the tenure instead of compounding it.
For a ₹10 lakh FD at 6.75% monthly payout for 5 years, you receive approximately ₹5,625 per month — predictable, consistent income. Compare this to the cumulative FD at 7% which gives ₹4,07,228 at maturity — more total interest but no monthly flow.
Verdict: Monthly payout if you need the income. Cumulative if you're wealth-building. Never choose monthly payout just because it feels like more money — the cumulative option almost always builds more wealth.
Every major bank offers senior citizens (60+) an additional 0.5% interest rate on FDs. On ₹10 lakhs for 3 years, 0.5% extra interest is approximately ₹16,000 more at maturity — meaningful. Post Office Time Deposits do not offer this extra rate but are sovereign-guaranteed.
Senior citizens also get a higher TDS threshold — ₹50,000 per year instead of ₹40,000. And Form 15H can be submitted to avoid TDS entirely if total income is below ₹3 lakhs.