How to choose the best Fixed Deposit plan

Confused about choosing the right Fixed Deposit plan? Our guide helps you pick the perfect one for your financial aspirations. Secure your future with confidence.
3 mins
18 August 2023

Fixed deposits (FDs) are one of the most popular investment options available in India. With numerous banks and non-bank financial institutions offering FDs, choosing the right one can be a daunting task. The key to choosing the best fixed deposit plan lies in understanding what you are looking for in an investment and what the various options in the market offer. This article aims to present the factors you should consider when choosing the best fixed deposit plan that aligns with your investment objectives.

Factors to consider before investing in a fixed deposit plan

The fixed deposit comes with the assurance of capital safety, even during increasing market volatilities. You can reap the benefit of steady capital appreciation and enjoy the advantages of a safe investment tool with fixed deposits.

You can choose the best-fixed deposit plan by considering the following factors:

  • Interest rate: Compare the Fixed Deposit interest rates of different types of FDs offered by different institutions.
  • Credibility: Opt for only “A”-rated deposit schemes, with credible ratings from reputable organisations like ICRA or CRISIL.
  • Deposit tenure: Long-duration deposits usually offer higher interest rates. Cross-check the rates against the lock-in periods of the FD for high returns in time for your goals.
  • Interest calculation and payouts: If you need regular assistance, check for periodic interest payouts and note the compounding frequency (higher implies more interest).
  • Reinvestment: Reinvest the earned interest to increase your FD corpus. Look for FD auto-renewal to reinvest seamlessly.
  • Penalty: Check the penalties for breaking an FD before maturity in case of any emergency. Most NBFCs and banks lower the interest rates in case of premature withdrawal.


Choosing the best Fixed Deposit (FD) plan is a crucial decision that can significantly impact your financial stability and growth. While the options available may seem overwhelming, a thoughtful and systematic approach can simplify the selection process.

First and foremost, it's essential to assess your financial goals and requirements. Your investment objectives, risk tolerance, and liquidity needs will guide you towards the most suitable FD plan. Consider the tenure that aligns with your goals, whether it's short-term liquidity or long-term wealth creation.

Diversity in FD offerings allows investors to pick a plan that complements their financial strategy. Explore options like Cumulative and Non-Cumulative FDs, company FDs, and special schemes for senior citizens, which may offer additional benefits.

Interest rates are a key factor in choosing an FD plan. Compare rates offered by different financial institutions to secure the best returns. Opting for a trusted institution, like Bajaj Finance, can provide not only competitive interest rates but also various features like flexibility in tenure, easy online management, and tools like the FD calculator to help you make well-informed decisions.

Lastly, stay informed about the prevailing market conditions, as this can impact FD interest rates. Regularly reviewing your investment strategy will ensure that your FD plan continues to meet your evolving financial needs. By following these guidelines, you can confidently select the best FD plan in India that propels you towards a secure and prosperous financial future.

Calculate your expected investment returns with the help of our investment calculators:

Investment Calculator
SIP Calculator FD calculator SDP calculator Gratuity Calculator

Frequently asked questions

I want to open a fixed deposit (FD) account with a certain bank. Should I have a savings account with the bank?

You typically don't need to have a savings account with a bank to open an FD account. However, some banks may offer additional benefits or simplify the FD account opening process if you have an existing savings account with them.

Is there a nomination facility available if I open an FD account?

Yes, most banks and NBFCs provide a nomination facility when opening an FD account. This allows you to designate a nominee who will receive the deposit's proceeds in case of the account holder's unfortunate demise.

Can NRIs open FD accounts in India?

Yes, NRIs (Non-Resident Indians) can open FD accounts in India. There are specific NRI FD schemes designed to cater to the needs of non-resident investors.

Is Tax Deducted at Source (TDS) applicable on opening an FD account?

Yes, Tax Deducted at Source (TDS) is applicable to the interest earned on FD accounts.

Which financial institution offers one of the best FD rates in India?

Bajaj Finance offers some of the best FD rates in India, providing competitive returns (up to 8.60% p.a.) and a range of flexible options.

Which bank is safest for the best FD plan?

When it comes to safety, nationalised banks, large private banks, and well-established NBFCs like Bajaj Finance are generally considered safe options for the best FD plans.

Are there any risks involved with FDs?

FDs are generally considered low-risk investments. However, there is always some risk involved due to interest rate fluctuations, liquidity constraints, and inflation.

Which is the most reliable FD Plan?

The reliability of an FD plan may vary depending on your financial goals. Bajaj Finance Fixed Deposits, for example, offer the combination of attractive interest rates and safety, making them a reliable choice for investors looking for a secure and rewarding investment avenue.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.