Key Takeaways
- You lock a sum for a fixed term at a pre-agreed interest rate.
- Returns are known upfront, unlike market-linked investments.
- Interest can be paid out periodically or compounded until maturity.
- Premature withdrawal usually carries a penalty.
The basics
A fixed deposit (FD) is an arrangement where you place a lump sum with a bank for a chosen term — anywhere from a few days to several years. In return, the bank pays interest at a rate fixed when you open the deposit. Because the rate is contracted, you know the maturity value in advance.
What the rate depends on
FD interest rates vary by bank, deposit term, and depositor category, and they change over time based on prevailing conditions. For that reason we never present any single FD rate as universal. Always check the current rate with your bank before booking.
Payout vs cumulative
You can usually choose to receive interest periodically (a payout or non-cumulative FD) or let it compound and receive everything at maturity (a cumulative FD). The cumulative option generally results in a higher maturity value because interest earns further interest.
Estimate maturity under any rate you enter with the FD calculator.
Sources
We reference primary and official sources. Rate- and rule-dependent details must be verified against the latest official information.
Related Calculators
Related Guides
Cumulative vs Non-Cumulative FD
A cumulative FD reinvests interest until maturity for a higher final value; a non-cumulative FD pays interest out periodically for regular income.
bankingFD vs PPF: A Practical Comparison
An FD is a flexible bank deposit for any term; PPF is a long-tenure government savings scheme with annual compounding. They serve different horizons and purposes.
taxHow Is Interest on FDs and RDs Taxed?
Interest earned on fixed deposits and recurring deposits is fully taxable as 'income from other sources' at your slab rate. Banks may deduct TDS above thresholds, but you owe tax on the interest either way. The post-tax return is what to compare against alternatives.
bankingHow Is FD Interest Calculated?
FD interest is calculated using compound interest. The maturity value depends on the principal, the interest rate, the term, and how often interest is compounded.
investingSIP vs FD: Which Fits Your Goal?
A SIP invests in market-linked mutual funds with variable returns and risk; a fixed deposit offers a contracted interest rate with high capital stability. Neither is universally better.