Before starting a fixed deposit (FD), it is common for depositors to compare the interest rates offered by different banks so that they can maximise the income earned on it.
Typically, banks offer high interest on their long term deposits and low when the deposit is made for a short period. A small difference of 50 basis points in interest income can made a considerable difference over a long period.
For instance, an extra income of 1 percent on ₹5 lakh FD gives an income of 15,000 over three years and ₹25,000 over five years. And if the deposit is ₹10 lakh, this can rise to ₹50,000 over a period of five years.
So, this is important to choose the bank offering highest interest rate.
Here we list out the top six banks offering highest rates:
HDFC Bank: As we can see in the table below, HDFC Bank offers 7.25 percent to general citizens and 7.77 percent to senior citizens on an FD of 18 months to 21 months.
ICICI Bank: This private bank offers 7.25 percent to general citizens and 7.85 percent to senior citizens on an FD of 15-18 month tenure.
Kotak Mahindra Bank: This bank offers 7.4 percent to general citizens and 7.9 percent to senior citizens on an FD of 390-391 day tenure.
Federal Bank: This offers 7.5 percent to general depositors and 8 percent to senior citizens on an FD of 444 days.
Bank of Baroda: This state lender offers 7.15 percent to general depositors and 7.65 percent to senior citizens on an FD of 2-3 year tenure.
Union Bank of India: This state lender offers 7.3 percent to general citizens and 7.8 percent to senior citizens on an FD of 456-day tenure.
Meanwhile, wealth advisors often recommend investors to opt for FD only for a portion of portfolio since FD income is taxable. So those taxpayers who fall in the highest tax bracket of 30 percent are going to be left with only 4.9 percent even when the interest is as high as 7 percent per annum.
