Fixed Deposit Interest Rates: Know Everything You Wanted

Fixed Deposit schemes are designed by the banks such that the customer deposit their money with the bank for a time period and in return, the bank gives interest rate on the amount and upon the maturity, they get the total amount from the bank.

It is one of the most popular as well as obsolete investment scheme from other ubiquitous schemes available. There is no risk in the investment and hence is widely popular among the people. It is categorized under short term fixed deposit and mid to long term fixed deposit. Also, special provisions are made by banks for the senior citizens, they usually get the higher fixed deposit rates interest on their deposits.

The time period for the deposit can vary from 7 days, 10 days, 1 year to 10 years. It depends on the customer to choose the scheme and hold the deposit for whatever time period they want.  The interest rate is higher in comparison to other investment.

The Points to Remember for Maximum Outcome:

• The Principal amount that is deposited with the banks or NBFC should be carefully seen before choosing the scheme.
• Duration of the time period.
• Penalty Clause.
• The interest rate on the fixed deposit.

The FD interest rate provided by the bank are actually depended on several others factors as well. Let's take a look at what decides the rate of interest applied on fixed deposits-

RBI Regulation- When Reserve Bank Of India tightens the monetary policy to regulate the flow of cash, it tends to change the repo rate and CRR, as a result the interest on the fixed deposit also changes. If the repo rate is increased the interest rate also plummets while the decrease in CRR decreases the interest rate and vice- verse.

Inflation- The situation when the cost of commodities in the market is dearer, it is the sign of inflation. In such a case, there is fear of money devaluation. So in order to recover the interest on the lent amount, it can increase the rate of interest to attract investment on the term deposit.

Recession- The recession is a scenario in an economy when the unemployment is beyond a benchmark point in a country. The loss of job directly affects the demand and supply of goods and investment due to the economic slowdown. Then the Central Bank or RBI has to release the funds in the market, which they do by reducing the CRR. As a result of which the interest rate also decreases to maintain the liquidity.

Demand & Supply of Credit- If the demand for credit in the market is low, then the interest rate on the fixed deposits also decreases and vice-e- visa.

Current Economics Scenario- The present scenario of the economy is very important to determine the interest rate. In the case of the growing or emerging economy, the credit demand is high and the lending rates also increase.

The interest rates provided by the lenders are dependent on all these market scenarios. The depositor should check for all these conditions before making an investment through Fixed Deposit. The maximum benefits can be extracted when you compare rates given by various lenders and choose which has the maximum outcome.

The Rate of Interest on Fixed Deposit Provided by The Top Banks-

Fixed Deposits with Bank	Tenure (Min-Max)	Interest Rates for Regular Deposit
State Bank of India	7 days-10 years	5.25% p.a.-7.00% p.a.
Indian Post Office	1 year-5 years	7.10% p.a.-7.90% p.a.
HDFC Bank	7 days-10 years	3.50% p.a.-7.25% p.a.
ICICI Bank	7 days-10 years	4.00% p.a.-7.50% p.a.
Axis Bank	7 days-10 years	3.50% p.a.-7.50% p.a.
Punjab National Bank	7 days-10 years	4.25% p.a.-7.50% p.a.

FOR THE SENIOR CITIZENS-

Fixed Deposits with Bank	Tenure (Min-Max)	Senior Citizen FD Rates
State Bank of India	7 days-10 years	5.50% p.a. to 7.75% p.a.
Indian Post Office	1 year-5 years	7.10% p.a. to 7.90% p.a.
HDFC Bank	7 days-10 years	4.00% p.a. to 8.00% p.a.
ICICI Bank	7 days-10 years	4.50% p.a. to 8.00% p.a.
Axis Bank	7 days-10 years	3.50% p.a. to 8.00% p.a.
Punjab National Bank	7 days-10 years	4.75% p.a. to 8.00% p.a.