What is the formula to calculate FD maturity amount?

For quarterly compounding (most bank FDs): A = P × (1 + r/4)^(4n), where P is principal, r is annual interest rate, n is tenure in years. For simple interest FDs: A = P × (1 + r × n). For example, Rs 1 lakh at 7.5% for 3 years quarterly compounded: A = 1,00,000 × (1 + 0.075/4)^12 = Rs 1,25,088.

Which bank has the highest FD interest rate in 2026?

Small finance banks offer the highest FD rates, often reaching 8.5-9.5% for regular depositors and 9.0-10.0% for senior citizens. Among major scheduled banks, private banks like IDFC FIRST, IndusInd, and Yes Bank offer 7.5-8.0%. SBI and other PSU banks typically offer 6.5-7.25%. However, higher rates come with higher risk — always check DICGC insurance coverage.

What is the tax on FD returns in 2026?

FD interest is added to your income and taxed at your applicable slab rate. If your total FD interest in a financial year exceeds Rs 40,000 (Rs 50,000 for senior citizens), the bank deducts TDS at 10% (or 20% if no PAN). If your total income is below the taxable limit, you can submit Form 15G (under 60) or Form 15H (senior citizens) to avoid TDS.

Is there a 5-year tax-saving FD?

Yes. A 5-year tax saver FD is eligible for Section 80C deduction up to Rs 1.5 lakh per financial year. The investment is locked for exactly 5 years with no premature withdrawal. Interest earned is taxable. This is the only FD that offers a 80C benefit, making it useful for tax planning — though PPF and ELSS typically offer better post-tax returns.

What is DICGC insurance and how much of my FD is covered?

DICGC (Deposit Insurance and Credit Guarantee Corporation) insures bank deposits up to Rs 5 lakh per depositor per bank (covering principal + interest together). This applies to all RBI-scheduled commercial banks. For deposits above Rs 5 lakh, the excess is not insured. To protect larger amounts, spread deposits across multiple banks.

What is a cumulative vs non-cumulative FD?

A cumulative FD reinvests the interest periodically (monthly, quarterly, or annually) and pays out the total amount (principal + compounded interest) at maturity. A non-cumulative FD pays interest at regular intervals (monthly, quarterly, annually) into your savings account. Cumulative FDs earn more due to compounding. Non-cumulative FDs are better for those who need regular income.

Can I take a loan against my FD?

Yes, most banks offer loans against FD (overdraft) at the FD rate + 1-2%. For example, if your FD is earning 7.5%, the loan against it costs 8.5-9.5%. This is significantly cheaper than personal loans (14-22%) and is useful for short-term cash needs without breaking the FD prematurely.

What happens if I break an FD before maturity?

Premature FD withdrawal typically incurs a penalty of 0.5-1.0% reduction in the applicable interest rate. For example, if you book a 3-year FD at 7.5% and break it after 1 year (when the 1-year rate was 6.5%), you get 6.5% - 1.0% = 5.5% for the year held. The penalty applies to the rate actually earned, not the original rate.

Article Not Found

The blog post you are looking for does not exist or may have been moved.

Browse All Articles

Call WhatsApp EMI Calc