Calculating Interest Rates On Regular Fixed Deposit

Fixed deposit interest (FD) rates remain fixed for the entire tenure once funds are deposited. Bank FDs are flexible savings instruments in terms of the deposit amount, tenure, and premature withdrawal. Among various types of FDs, one is regular FD. The interest rate on an FD account depends on the choices an investor makes considering various aspects.

How is the Interest Rate Calculated on a Regular FD?

A regular fixed deposit interest rate is decided based on the following key factors that are within the investors’ reach:

  1. Deposit Amount: A regular FD account with a bank can be opened with a small amount of Rs.10,000 that can go up to crores. The amount deposited is considered to calculate the interest rate on an FD. The higher the deposit amount, the better the FD returns.
  2. FD Tenure: The FD tenure refers to the period for which the amount remains deposited in an FD account. It can be between 7 days to 20 years. Investors choosing a longer term can earn at high-interest rates on fixed deposits - up to 7.8%. The maximum FD tenure is 10 years for digital or online FDs.
  3. Option for Interest Credit: FD interest income can be credited to the investor's account on a monthly/quarterly/half-yearly basis in the case of a non-cumulative FD account. In the case of a cumulative FD account, interest is credited to the investor's account on maturity. The interest rate offered on cumulative FDs is higher than on non-cumulative FDs.
  4. Choice of FD issuer: FDs are among the most common fixed-income instruments offered by most banks. FD interest rates vary with each bank. Individuals making informed decisions after comparing FD returns with different banks can earn higher interest rates. Choose renowned banks offering high interest rates on fixed deposits, up to 7.8%.

Thus, the interest rates on regular fixed deposits are subject to the sole discretion of the bank and investors can get the most out of their capital by making the right choices on crucial aspects as mentioned above.


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