Complete Fixed Deposit Guide
Master FD investments with smart strategies and maximize your returns
What You'll Learn
Fixed Deposit Fundamentals
A Fixed Deposit (FD) is a financial instrument where you deposit money with a bank or financial institution for a predetermined period at a fixed interest rate. It's one of the safest investment options available.
Key Features of Fixed Deposits
- • Guaranteed returns with fixed interest rates
- • Capital protection with deposit insurance up to ₹5 lakh
- • Flexible tenure from 7 days to 10 years
- • Loan facility against FD (up to 90% of deposit)
- • Premature withdrawal option (with penalty)
How Fixed Deposits Work
When you open an FD, you agree to keep your money deposited for a specific period. In return, the bank pays you interest at a predetermined rate. The interest can be paid monthly, quarterly, annually, or at maturity.
Interest Rates & Calculation
Current FD Rates (2025)
Interest Calculation
Simple Interest:
Maturity Amount = P + (P × R × T) / 100
Compound Interest:
A = P(1 + r/n)^(nt)
P = Principal, R = Rate, T = Time, n = Compounding frequency
💡 Pro Tip
Choose quarterly or monthly interest payout options to reinvest the interest and benefit from compounding.
Types of Fixed Deposits
Regular FD
Standard fixed deposit with fixed tenure and interest rate. Most common type.
Tax Saver FD
5-year lock-in period with tax deduction up to ₹1.5 lakh under Section 80C.
Senior Citizen FD
Higher interest rates (typically 0.5% extra) for citizens above 60 years.
Flexi FD
Combination of savings and FD. Automatically converts excess savings to FD.
Cumulative FD
Interest is compounded and paid at maturity along with principal.
Non-Cumulative FD
Interest is paid out monthly, quarterly, or annually as per choice.
Tax Implications & TDS
Important Tax Rules
- • FD interest is fully taxable as per your income tax slab
- • TDS of 10% deducted if annual interest exceeds ₹40,000
- • Senior citizens: TDS threshold is ₹50,000
- • Submit Form 15G/15H to avoid TDS if total income is below taxable limit
| Income Slab | Tax Rate | Effective Return (7% FD) |
|---|---|---|
| Up to ₹2.5 lakh | 0% | 7.0% |
| ₹2.5L - ₹5L | 5% | 6.65% |
| ₹5L - ₹10L | 20% | 5.6% |
| Above ₹10L | 30% | 4.9% |
Your FD Investment Action Plan
Step 1-3: Foundation
Assess Your Goals
Define investment timeline and risk tolerance
Compare Rates
Research current FD rates across different banks
Choose Bank
Select based on rates, reputation, and convenience
Step 4-6: Implementation
Plan Laddering
Stagger FD maturities for liquidity and rate optimization
Submit Forms
File Form 15G/15H if applicable to avoid TDS
Monitor & Renew
Track maturity dates and reinvest strategically
Ready to Start Your FD Journey?
Use our calculators to plan your fixed deposit investments and compare different scenarios.