Maximise Your Savings: A Guide to the Highest Fixed Deposit Rates in India for 2024

Fixed Deposits (FDs) are widely used as a savings option in India, offering steady returns with minimal risk. Both banks and Non-banking Financial Companies (NBFCs) offer FDs. When investing in an FD, you deposit a lump sum with the issuer for a specific period at a fixed interest rate. Once the tenure is completed, you receive the original deposit along with the accumulated interest. As 2024 approaches, finding some of the highest FD rates in India could help savers maximise their returns efficiently.

How Do Fixed Deposits Work?

When you invest in an FD, you agree to lock your money for a specific tenure, ranging from 7 days to 10 years, depending on the issuer. The interest rate remains fixed during the entire period, and you can choose how often you receive interest payments. This can be at regular intervals (monthly, quarterly, or annually) or upon maturity.

There are two key types of FDs:

• Cumulative FD: The interest is compounded over time and disbursed at the end of the tenure, leading to increased returns.
• Non-cumulative FD: Interest is paid at regular intervals, useful for those who seek a regular income stream.

In both cases, FDs are a low-risk option for individuals looking to preserve their capital while earning modest returns.

Interest Rates on FDs: What to Expect in 2024

Interest rates on FDs vary between issuers and can depend on several factors, including the tenure, the amount deposited, and whether you are a senior citizen. The rates offered in 2024 are expected to remain competitive as banks and NBFCs adjust to market conditions, inflation, and monetary policies. Let’s take a look at some of the highest FD interest rates in India across different issuers.

Note: The above rates are indicative and may change. It’s important to check the latest rates directly on the issuers’ websites.

As highlighted in the table, FDs offered by NBFCs generally come with marginally higher interest rates than those provided by banks. However, FDs from banks may offer greater security, as they are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) for amounts up to ₹5 Lakhs per depositor, per bank, in the event of a default.

Senior Citizen FD Rates

Senior citizens enjoy a higher interest rate on their FDs, typically between 0.25% to 0.50% more than regular rates. This added benefit can significantly enhance returns, making FDs an attractive option for retirees looking for stable income. For example, Bajaj Finance offers 8.00% p.a. for senior citizens compared to 7.75% p.a. for regular customers.

Why FDs Are a Low-risk Investment

FDs are considered low-risk because the returns are guaranteed, and the interest rate does not fluctuate with market changes. This is in contrast to market-linked instruments like stocks or mutual funds, which may experience volatility. However, it’s essential to remember that the returns on FDs may not always beat inflation, especially if the inflation rate is higher than the interest rate on the FD.

Factors to Consider When Choosing an FD

Interest Rate

Compare interest rates across issuers to ensure you are getting the highest possible return for the chosen tenure.

Tenure

Consider your liquidity needs. Locking your funds for longer periods could fetch higher rates, but you may need flexibility for unforeseen expenses.

Issuer’s Credibility

Ensure you invest in an FD issued by a reputed bank or NBFC. While NBFCs offer higher interest rates, they may involve slightly higher risks compared to banks.

Premature Withdrawal

Most issuers allow premature withdrawals, but this comes with penalties, usually in the form of reduced interest. Opt for an FD that offers a flexible withdrawal option if you anticipate needing the funds earlier.

Taxability

Interest earned on FDs is taxable under the Income Tax Act, 1961. TDS (Tax Deducted at Source) is applicable if your interest income exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.

How to Calculate Returns on Your FD

You can calculate fd returns using the following formula:

Maturity Amount = P x (1 + R/100)^T

Where:

P = Principal (the amount you invest)

R = Rate of interest (p.a.)

T = Tenure (in years)

For example, if you invest ₹1,00,000 in an FD offering 7.50% p.a. for 5 years, your maturity amount will be calculated as:

Maturity Amount = 1,00,000 x (1 + 7.50/100)⁵

Maturity Amount = ₹1,43,685.94

Several banks and NBFCs provide online FD calculators to help you estimate your returns more easily. These tools require you to input the principal amount, interest rate, and tenure, and the calculator will show the maturity amount along with the interest earned.

Tax Benefits on FDs

Under Section 80C of the Income Tax Act, 1961, you can claim a deduction of up to ₹1.5 Lakhs by investing in a tax-saving FD with a 5-year lock-in period. However, the interest earned on these FDs is still taxable.

Should You Invest in FDs?

FDs are suitable for conservative investors looking for guaranteed returns with minimal risk. If you seek higher returns, you could explore options such as mutual funds or equities, though they come with higher risks. FDs can also play a vital role in diversifying your investment portfolio, acting as a cushion during market downturns.

That said, it’s essential to consider inflation when planning long-term investments. While FDs are safe, the real value of your returns could erode if inflation outpaces the interest earned on the deposit.

Conclusion

Maximising your savings with some of the highest FD interest rates in India for 2024 can help you grow your wealth steadily. By comparing rates, choosing the right tenure, and considering factors like tax benefits and liquidity needs, you can make an informed decision. Whether you are a regular saver or a senior citizen, FDs remain a reliable savings instrument to preserve capital and earn predictable returns.