Why Compare FD Rates Before Investing?
Fixed Deposits remain India's most popular savings instrument ā trusted by crores of Indians for safe, guaranteed returns. But here's what most people don't realize: FD rates vary significantly between banks, and choosing the wrong bank can cost you lakhs in lost interest over time.
For example, on a ā¹10 lakh deposit for 5 years, the difference between a 7% and 7.5% rate is over ā¹30,000 in additional interest. That's why comparing rates matters.
Use our FD Rate Comparison tool to compare rates across all major banks instantly.
FD Interest Rates Comparison ā February 2026
Here are the latest FD rates from major banks for general citizens (below 60 years):
| Bank | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|
| SBI | 6.80% | 7.00% | 6.75% | 6.50% |
| HDFC Bank | 6.60% | 7.00% | 7.00% | 7.00% |
| ICICI Bank | 6.70% | 7.00% | 7.00% | 6.90% |
| PNB | 6.80% | 7.00% | 6.50% | 6.50% |
| Post Office TD | 6.90% | 7.00% | 7.10% | 7.50% |
| Axis Bank | 6.70% | 7.10% | 7.10% | 7.00% |
Note: Rates are indicative and subject to change. Senior citizens typically get 0.25ā0.50% higher rates. Always check the latest rates on the bank's official website before investing.
Senior Citizen FD Rates ā Extra Benefits
If you're 60 years or older, you get higher FD rates across all banks:
| Bank | Extra Rate (Senior) | Best Tenure Rate |
|---|---|---|
| SBI | +0.50% | 7.50% (2-3 years) |
| HDFC Bank | +0.50% | 7.75% (Special tenures) |
| ICICI Bank | +0.50% | 7.50% (Special tenures) |
| Post Office | +0.40% | 7.90% (5 years) |
Tip for seniors: Post Office 5-year FD often gives the best rates for senior citizens, plus it qualifies for Section 80C tax deduction.
Compare rates based on your deposit amount using our FD Comparison Calculator.
Post Office FD vs Bank FD: Which is Better?
Here's a straightforward comparison:
Post Office FD Advantages
- Backed by Government of India ā sovereign guarantee
- Often higher interest rates, especially for 5-year tenure
- 5-year TD qualifies for Section 80C tax deduction
- Available in every pincode through India Post
Bank FD Advantages
- More flexible tenure options (7 days to 10 years)
- Online management and premature withdrawal
- Higher limits ā banks accept larger deposits
- Auto-renewal and sweep-in facilities
- DICGC insurance up to ā¹5 lakh per depositor per bank
Verdict: For long-term deposits (5 years), Post Office often wins on rates. For flexibility and convenience, bank FDs are better.
Tax-Saving FD: What You Should Know
Tax-saving FDs are 5-year fixed deposits that qualify for Section 80C deduction up to ā¹1.5 lakh. Key points:
- Minimum lock-in period: 5 years (no premature withdrawal allowed)
- Maximum investment for tax benefit: ā¹1.5 lakh per year
- Available at all scheduled banks and Post Office
- Interest is taxable ā TDS applies if interest exceeds ā¹40,000 per year (ā¹50,000 for seniors)
Pro tip: If you've exhausted your 80C limit with EPF and insurance, you don't need a tax-saving FD. Instead, go for a regular FD with the best rate for your preferred tenure.
Calculate how much tax you save with our Income Tax Calculator.
Tips to Maximize Your FD Returns
- Ladder your FDs: Instead of one ā¹10 lakh FD, create 5 FDs of ā¹2 lakh each with different maturities (1, 2, 3, 4, 5 years). This gives you liquidity while earning higher rates on longer tenures.
- Choose cumulative option: If you don't need regular income, choose cumulative FD where interest is compounded and paid at maturity ā this earns you 10-15% more than monthly/quarterly interest payout.
- Compare before investing: Small differences in rates add up. A 0.5% difference on ā¹10 lakh over 5 years = ā¹30,000+ extra.
- Consider small finance banks: Banks like AU, Ujjivan, and Jana often offer 0.5-1% higher rates than big banks, with the same DICGC insurance protection.
Small Finance Banks FD Rates 2026 ā Higher Returns, Same Safety
Small Finance Banks (SFBs) consistently offer 0.5ā1.5% higher FD rates than large banks. And here's the key ā your deposits are covered by the same DICGC insurance (up to ā¹5 lakh per depositor) as any SBI or HDFC deposit.
| Small Finance Bank | 1 Year | 2 Years | 3 Years | 5 Years |
|---|---|---|---|---|
| Unity SFB | 8.50% | 8.25% | 8.00% | 7.90% |
| Ujjivan SFB | 8.25% | 8.00% | 7.75% | 7.50% |
| AU SFB | 7.75% | 7.75% | 7.50% | 7.25% |
| Jana SFB | 8.00% | 7.90% | 7.75% | 7.50% |
| Equitas SFB | 8.00% | 7.75% | 7.50% | 7.25% |
Example: ā¹10 lakh in Unity SFB FD at 8.50% for 1 year earns ā¹85,000 vs ā¹68,000 in SBI at 6.80% ā that's ā¹17,000 more with the same safety.
Tip: Spread your deposits across multiple banks (ā¹5 lakh each) to maximize DICGC insurance coverage.
Tax on FD Interest ā TDS Rules You Must Know
FD interest is fully taxable as "Income from Other Sources." Here's what you need to know:
TDS on FD Interest
| Scenario | TDS Rate | Threshold |
|---|---|---|
| Interest from bank FD | 10% | If annual interest > ā¹40,000 |
| Senior citizens (60+) | 10% | If annual interest > ā¹50,000 |
| No PAN submitted | 20% | No threshold |
| Post Office FD | 10% | If annual interest > ā¹40,000 |
How to Avoid TDS ā Form 15G/15H
- Form 15G: For individuals below 60 whose total income is below the taxable limit. Submit to each bank where you hold FDs.
- Form 15H: For senior citizens (60+) whose total tax liability is zero. No income limit restriction.
- Submit at start of financial year (April) to each bank branch. It's valid for one year.
Important: TDS is not the final tax. You must declare FD interest in your ITR and pay tax at your slab rate. TDS is just an advance collection. Calculate your total tax liability with our TDS Calculator.
FD vs RD vs SIP ā Which Is Better for Your Money?
Confused between Fixed Deposit, Recurring Deposit, and SIP? Here's a clear comparison:
| Factor | Fixed Deposit (FD) | Recurring Deposit (RD) | SIP (Mutual Fund) |
|---|---|---|---|
| Returns | 6.5ā8.5% (guaranteed) | 6ā7.5% (guaranteed) | 12ā15% (historical, not guaranteed) |
| Risk | Very Low | Very Low | Medium to High |
| Investment Type | Lumpsum (one-time) | Monthly (fixed) | Monthly (flexible) |
| Liquidity | Premature withdrawal (penalty) | Premature withdrawal (penalty) | Redeem anytime (no penalty after exit load) |
| Tax | Interest fully taxable | Interest fully taxable | LTCG tax 12.5% above ā¹1.25 lakh |
| Best For | Emergency fund, short-term goals | Building savings habit | Long-term wealth (5+ years) |
ā¹10 Lakh Comparison Over 5 Years
| Instrument | Amount Invested | Returns | Final Value |
|---|---|---|---|
| FD at 7.5% | ā¹10,00,000 (lumpsum) | ā¹4,35,629 | ā¹14,35,629 |
| RD at 7% | ā¹10,00,000 (ā¹16,667/month) | ā¹1,99,000 | ā¹11,99,000 |
| SIP at 12% | ā¹10,00,000 (ā¹16,667/month) | ā¹3,70,000 | ā¹13,70,000 |
Verdict: FD wins for lumpsum investments with guaranteed returns. SIP wins for long-term monthly investing (10+ years). RD is the simplest option for beginners building a savings habit.
Compare your options: SIP Calculator | FD Calculator
ā Frequently Asked Questions
Which bank gives the highest FD interest rate in 2026?
For general citizens, Post Office tends to offer the highest rates for 5-year FDs (7.50%). Among banks, small finance banks like AU, Ujjivan, and Jana Small Finance Bank often offer rates above 8%. Use our FD comparison tool to find the best current rates.
Is Post Office FD safer than bank FD?
Post Office FDs are backed by the Government of India (sovereign guarantee), making them among the safest investments. Bank FDs are insured by DICGC up to ā¹5 lakh per depositor per bank.
Is FD interest taxable?
Yes, FD interest is fully taxable as "Income from Other Sources" and is added to your total income. TDS of 10% is deducted if annual interest exceeds ā¹40,000 (ā¹50,000 for senior citizens).
Can I break an FD before maturity?
Regular bank FDs can be broken prematurely, but the bank charges a penalty of 0.5-1% on the applicable rate. Tax-saving 5-year FDs cannot be broken before maturity.
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