Banks with Highest Interest Rates on Fixed Deposits in India

Different banks offer different interest rates on fixed deposits. Most of the bank offer about 4% interest rate on fixed deposits but some of the private banks have started giving higher interest rates to gain more customers. Read this post for more information regarding banks with highest interest rates on fixed deposits in India.

Fixed deposits are good investment option for people who do not want to take the risk of spending money in mutual funds or shares. The fixed deposits give a guaranteed return and thus provide you the peace of mind. The interest rates on fixed deposits vary from one bank to another. In order to get the maximum return from fixed deposits, you should have updated information about the banks offering highest interest rates on fixed deposits.

Here is the list of current interest rates. Note that the interest rates keep changing regularly and thus I have also added the link to official web page of the corresponding bank where you can get the updated interest rates.

Interesting things to note about the Fixed Deposit Interest Rates

There are a number of things to be kept in mind regarding FDs and their interest rates:
  1. The banks offering higher interest rates on FDs are the new banks who want to attract more customers. Some of the examples are Kotak Mahindra Bank and Dhanlaxmi bank. These banks have also advertised a lot stressing the fact that they offer higher interest rates on FDs.

  2. The popular banks like State Bank of India, HDFC, ICICI do not have the highest interest rates on FDs. Since these are already having good reputation and customer base, they do not rely much on this aspect for new customers.

  3. An important thing to remember is that all the income from FD interest is taxable. This means that if you are in the higher tax bracket (30%), you will have to pay 30% of the interest amount as tax. You actual return comes out to be 6% if you have opted for FD with 9% interest rate.

  4. A common observation is that banks offer higher interest rates for FDs made for 2 years or longer duration.

How to Choose a Bank for FD

Now that we have discussed the interest rates for FDs in different banks, the question is whether we should consider only the interest option while opening the FD. In my opinion, one needs to consider some other factors as well. For instance, opening the FD in the same bank where you have the savings account will make the deposit and withdrawal easier. Also there is option to open a FD online in case of banks like SBI. This is useful for people who do not want to waste time in bank formalities.

FD rates in some of the popular banks are :
Central Bank of India : 7% for 365 days
State Bank of India : 6.90 % for 1 year to 455 days

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