A Fixed Deposit (FD) is a safe, low-risk investment where a lump sum is invested for a fixed tenure, earning higher interest than savings accounts.
Fixed Deposits (FDs) are among the most popular investments in India due to their safety and stable returns. An FD involves investing a lump sum with a bank, corporate, or NBFC for a fixed tenure at a predetermined interest rate. Returns remain unaffected by market fluctuations, ensuring predictability. Investors can choose interest payouts periodically or opt for compounding. FDs are preferred for their low risk, assured returns, and higher interest than savings accounts.
A Fixed Deposit (FD) is a financial instrument offered by banks and non-banking financial companies (NBFCs), where you deposit a lump sum amount for a fixed tenure at a predetermined interest rate. The interest earned is higher than that of a regular savings account. At maturity, you receive the principal along with accumulated interest. FDs are popular for their safety, guaranteed returns, and flexible investment periods.
A Fixed Deposit (FD) works by depositing a lump sum for a fixed tenure, typically ranging from 7 days to 10 years. The amount remains locked until maturity. Interest rates depend on the deposit amount and tenure, with longer durations usually offering higher returns. Interest earned can be paid periodically to a linked savings account or reinvested and compounded until maturity, based on the investor’s choice.
Interest earned on your FD is usually paid out at maturity. You can choose to have it directly credited to your linked savings account for immediate access or opt for it to be reinvested into your FD to accumulate over time.
Fixed deposits offer several advantages that make them a popular investment choice:
Different categories of fixed deposits include:
This is the most common type of FD available at all banks. You deposit a fixed amount of money for a specific tenure, and the bank pays you interest on it at regular intervals or at maturity. The interest rate is pre-determined by the bank and varies based on the tenure and amount invested.
These are FDs designed specifically for senior citizens. FD for senior citizen offer higher interest rates than standard FDs and are available to individuals aged 60 years and above.
This is a type of FD that allows you to withdraw money from your account without breaking the FD. You can withdraw up to a certain limit without incurring any penalty, and the interest rate is calculated on the remaining balance.
This is a type of FD where you deposit a fixed amount of money at regular intervals (usually monthly) for a specific tenure. The interest rate is pre-determined by the bank and varies based on the tenure and amount invested.
A Tax-Saving Fixed Deposit (FD) is a type of fixed deposit account that offers a tax deduction under Section 80C of the Income Tax Act, 1961 1. Any investor can claim a deduction of a maximum of Rs. 1.5 lakh per annum by investing in a tax-saving fixed deposit account. The lock-in period for this type of FD is 5 years, and the interest earned is taxable.
In cumulative FD, the earned interest is reinvested in the FD account. Both the principal amount and the accumulated interest are paid out at the end of the tenure. This suits investors seeking higher returns without the need for regular interest payouts.
Under this FD type, the earned interest is paid to the investor periodically such as monthly, quarterly, half-yearly, or annually, based on their preference. It is suitable choice for investors looking for a steady income stream.
Calculating interest on fixed deposits is simple, considering the investment amount, interest rate, and investment duration. The basic formula is:
Interest on FD=Amount Invested × Interest Rate × (Duration/12 months)
However, the interest amount varies based on whether you opt for a cumulative or non-cumulative FD. For example, let's consider investing Rs. 50,000 for 5 years at an annual interest rate of 8.5% p.a. In this scenario, a cumulative FD would yield a maturity value of Rs. 76,140.
Fixed deposit is a popular investment option for various reasons. It offers fixed returns, minimal risk, flexible tenure, tax benefits, and easy liquidity. FDs are suitable for a wide range of investors depending on their financial objectives and investment portfolio. Here are the types of investors who should invest in fixed deposits:
FDs are an idea investment option for new investors interested in learning about fixed income instruments. These investors can start with small investments and gradually increase their holdings.
People looking for a low-risk option to create a retirement corpus can invest in fixed deposits. This investment provides retirees with a regular and guaranteed income stream and protects their savings from market fluctuations.
FDs are an ideal choice for investors who prefer safe and low-risk investments. Conservative investors want to avoid fluctuations in returns that come with riskier investment products.
Investors with short-term goals can invest in fixed deposits to achieve their financial objectives. FDs offer flexible tenures from a few days to a few years. Investors can use the interest earned on the investment to meet their short-term financial goals.
FDs are a useful investment option to set aside emergency funds. They provide higher interest rates than savings accounts and offer easy liquidity with premature withdrawal.
All interest earned from Fixed Deposits is taxable under the Income Tax Act, 1961. The tax you pay depends on your overall income slab and can range from 0% to 30%.
Most banks and financial institutions deduct 10% TDS if your annual FD interest exceeds Rs. 10,000, provided you have submitted your PAN details. If you haven’t, the TDS rate increases to 20% as per government rules.
If your total income is below the minimum tax slab (10%), you can claim a refund or exemption on the deducted TDS. However, if your income falls under the higher slabs of 20% or 30%, you must pay additional tax over and above the standard TDS.
Here are some key features of Bajaj Finance Fixed Deposit:
Bajaj Finance offers one of the highest FD rates in the market, ranging from 6.41% p.a. to 7.40% p.a. for regular customers and up to 7.75% p.a. for senior citizens, depending on the tenure of the deposit. This means that you can earn higher returns on your investment without taking on any additional risks.
Bajaj Finance Fixed Deposits offer flexible tenures ranging from 12 to 60 months. This means that you can choose a tenure that suits your investment needs and goals. Whether you want to invest for a short-term or a long-term period, Bajaj Finance has got you covered. You can also opt for a cumulative FD, where the interest is compounded annually and paid out at maturity. In a non-cumulative FD, the interest is paid out monthly, quarterly, half-yearly or annually.
Bajaj Finance offers an easy online application process for opening a fixed deposit account. You can visit the Bajaj Finance website, fill out the application form, and upload the necessary documents. Once your application is approved, you can transfer the funds online, and your fixed deposit account will be opened instantly. This saves you time and hassle of visiting a bank or a financial institution to open an FD account.
Bajaj Finance Limited is rated CRISIL AAA/ STABLE and [ICRA]AAA(Stable). This indicates the highest degree of safety and stability regarding the timely payment of interest and principal on fixed deposits. This means that your investment is in safe hands, and you can be assured of timely payments of interest and principal.
Also read: TDS on FD interest
Bajaj Finance offers some of the highest FD rates, up to 7.75% p.a., and you enjoy high investment safety here because of the highest credit ratings - CRISIL AAA/STABLE and [ICRA]AAA(Stable). You can invest for a flexible tenure and start with a sum of just Rs. Rs. 15,000. By investing in a Bajaj Finance FD, senior citizens can also reap interest rate benefits up to 0.35% p.a. on their deposits.
Interest rate | up to 7.75% p.a. |
Minimum tenure | 1 Year |
Maximum tenure | 5 Years |
Deposit amount | Min- Rs. 15,000 |
Application process | Easy online paperless process |
Online payment options | Net Banking and UPI |
In India, various entities and individuals can open a Fixed Deposit (FD) account. Below are the eligible categories, explained in detail:
A step-by-step guide to invest in a fixed deposit
Once your fixed deposit is booked, you will receive the Fixed Deposit Acknowledgement (FDA) on your registered email address and as a link on your mobile number. An Electronic Fixed Deposit Receipt (e-FDR) will also be sent to your email ID within 3 working days (subject to documents being in the correct order)
Fixed Deposits (FDs) are a highly favored investment choice across India due to their foundational promise of Stability and Assured Returns. They are shielded from market volatility, offering fixed interest earnings that guarantee principal protection and predictable financial certainty. FDs provide Flexible Tenures, ranging from as short as 7 days up to 10 years, allowing investors to align their savings with diverse financial goals. Furthermore, a range of Multiple Options—including cumulative, non-cumulative, and tax-saving FDs—ensure there is a product suitable for every investor profile. For enhanced liquidity, FDs offer a valuable Loan Against Fixed Deposit facility, allowing up to 90% of the deposit value to be borrowed without breaking the investment. Finally, the entire process is streamlined by a Simple Application Process, which is often available instantly online.
Fixed Deposits remain a reliable choice for investors seeking stability, predictable returns, and capital safety. With flexible tenures and assured interest rates, they suit conservative investors, retirees, and short term planners. Although FD interest is taxable, careful tenure and payout selection can help manage returns while maintaining a balanced and low risk investment approach.
Interest payouts vary based on FD type; non-cumulative FDs offer regular payouts (monthly, quarterly, half yearly or annually), while cumulative FDs pay at maturity.
Premature withdrawal is possible but may incur penalties.
Yes, many financial institutions offer loans against FD.
An FD nomination allows you to designate a nominee who receives the amount in case of the depositor's demise.
No, FDs are not tax-free. The interest earned on your FD is considered taxable income and added to your overall annual income.
FD stands for Fixed Deposit. It is a financial instrument offered by banks and financial institutions where individuals deposit a sum of money for a fixed tenure, earning guaranteed interest rates. The principal amount and interest are returned upon maturity, making it a secure investment option.
A fixed deposit is an investment scheme where funds are locked for a predetermined period at a fixed interest rate. It offers flexible tenures, higher returns compared to savings accounts, tax-saving options under Section 80C, and assured growth of savings. Premature withdrawal might incur penalties.
For example, if you invest Rs. 1,00,000 in a 1-year fixed deposit at 6% interest per annum, you will earn ₹6,000 as interest. At the end of the tenure, the bank pays ₹1,06,000 (principal + interest). The investment ensures safety and steady returns without market-linked risks.
A fixed deposit account is a savings instrument where you deposit a lump sum amount for a fixed period at a predetermined interest rate. It offers guaranteed returns and is ideal for low-risk, long-term savings.
Fixed Deposits (FDs) are considered one of the safest investment options. They are regulated by the Reserve Bank of India and deposits offered by banks are insured up to Rs. 5 lakh per depositor per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
FDs also provide guaranteed returns, unlike market-linked instruments. However, they are not 100% risk-free. Risks include inflation reducing the real value of returns, limited liquidity in case of early withdrawal, and exposure to bank-specific risks for amounts above the insured limit.
Fixed Deposits are good if you want:
Capital protection and assured returns.
Predictable income without market volatility.
Emergency liquidity with manageable penalties.
They may not be ideal if:
You seek high long-term growth, since FD returns may not keep pace with inflation.
You need complete liquidity, as premature withdrawals attract penalties and lower interest.
The best FD depends on your goals:
Standard FD – Ideal for general savings with flexible tenures.
Tax-Saving FD – Offers a 5-year lock-in and tax benefits under Section 80C.
Senior Citizen FD – Provides higher interest rates for individuals aged 60 and above.
Flexi FD (Auto-Sweep) – Links your savings account with FD, ensuring liquidity while earning higher returns.
Interest on a Fixed Deposit is calculated based on the deposit amount, interest rate, tenure, and payout type. In cumulative FDs, interest compounds periodically and is paid at maturity. In non-cumulative FDs, interest is paid monthly, quarterly, half-yearly, or yearly, and does not compound within the deposit.
Yes, most Fixed Deposits allow premature withdrawal before maturity. However, early withdrawal usually attracts a penalty or a lower interest rate than originally agreed. The exact terms depend on the bank or financial institution and the FD scheme you choose.
A Fixed Deposit cannot be directly transferred to another person. However, you can add or change a nominee or convert the FD into a joint deposit, subject to the institution’s rules. In case of the depositor’s death, the FD is paid to the nominee or legal heir.
FDs provide stability, capital safety, and predictable, assured returns, shielding funds from market risk. They are ideal for conservative investors, retirees needing steady income, and those saving for short-term financial goals.
Yes, FD interest can be paid monthly by choosing a non-cumulative FD. This option provides periodic payouts (monthly, quarterly, half-yearly, or annually) for investors who require a steady income stream.
Yes, an FD can double in 10 years, depending on the interest rate and compounding frequency. A general guideline is the "Rule of 72," where dividing 72 by the annual interest rate gives you the approximate number of years it takes for your investment to double.
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