What is a Fixed Deposit?

A fixed deposit locks a lump sum with a bank at a guaranteed interest rate for a chosen period. As of July 2026, major banks pay roughly 6.0% to 6.6% on 1 to 5 year deposits, with senior citizens getting about 0.50% more. Small finance banks pay above that, and the post office 5-year time deposit offers 7.5%. Rates have drifted down through 2026 following repo-rate cuts, but the rate you lock at booking holds for your entire tenure.

How is FD Interest Calculated?

Most Indian FDs compound quarterly, using A = P × (1 + r/4)^(4t). So ₹5 lakh at 6.5% for 5 years matures at about ₹6.9 lakh. If you choose a monthly or quarterly payout instead of the cumulative option, you get regular income but give up the compounding.

Things to Know Before You Book

FD interest is taxable at your slab rate, and banks deduct TDS once it crosses ₹50,000 a year, or ₹1 lakh for seniors; Form 15G or 15H avoids the deduction if your income is below taxable limits. Deposit insurance from DICGC covers up to ₹5 lakh per depositor per bank, so split large sums across banks. Early withdrawal typically costs a 0.5% to 1% rate penalty. The special 5-year tax-saver FD qualifies for 80C in the old regime. And be honest about what an FD is for: after tax and roughly 4% inflation, the real return is thin, as the inflation calculator will show you. FDs are for capital safety and near-term goals, not long-term wealth building. Seniors looking for income should also compare SCSS at 8.2%.

Laddering: One Technique Worth Learning

Instead of one big FD, split ₹6 lakh into three ₹2 lakh deposits maturing in 1, 2 and 3 years, and roll each maturity into a fresh 3-year deposit. You get money coming due every year, an average of medium-term rates, and you never have to reinvest everything at one bad moment. After the first cycle, you permanently hold a rolling book of 3-year rates with annual access. If terms like FDR, cumulative versus payout, or the TDS thresholds are new to you, start with how fixed deposits actually work.

Small Details That Add Up

Bank rate cards have quirks: a 390-day "special" deposit often pays more than both the 1-year and 2-year standard slabs, so read the full card rather than the headline. Small finance banks pay 0.5% to 1.5% above the large banks with the same ₹5 lakh DICGC cover, as long as you respect the ceiling per bank. And sweep-in or flexi FDs earn FD rates on surplus savings-account balances while keeping instant access, which is why they are commonly used for emergency funds.

FAQs about FD Calculator

As of July 2026, large banks pay roughly 6.0–6.6% on 1–5 year deposits, with senior citizens getting about 0.50% extra; the post office 5-year time deposit pays 7.5%. Rates vary by bank and tenure and have been easing — check the bank's current card before booking.
With quarterly compounding: A = P × (1 + r/4)^(4×years). ₹1 lakh at 6.5% for 3 years matures at about ₹1.21 lakh. Payout FDs (monthly/quarterly interest) pay simple interest instead and mature at face value.
No — it is fully taxable at your slab. Banks deduct 10% TDS once interest crosses ₹50,000 a year (₹1 lakh for senior citizens). Only the 5-year tax-saver FD gives a deduction (80C, old regime), and even its interest is taxable.
Scheduled-bank FDs are insured by DICGC up to ₹5 lakh per depositor per bank (principal + interest). For larger amounts, spread deposits across banks or add joint-holder combinations to multiply cover.
Splitting a lumpsum into deposits maturing in successive years and rolling each maturity forward. You get yearly liquidity, average out rate cycles, and never reinvest everything at one bad moment — the standard structure for parking large safe-money allocations.
The bank recalculates interest at the rate applicable to the period you actually held (not your booked rate) and usually applies a 0.5–1% penalty on top. If you need only part of the money, many banks allow partial withdrawal or a loan against the FD at ~1% over your deposit rate — often cheaper than breaking it.