How to Choose the Best Fixed Deposit
FD is the simplest, safest investment in India — but returns vary 3% to 9.5% across banks, tenures and senior-citizen status. To pick the right one:
- Compare rates across banks — small finance banks often pay 1–2% more than large banks
- Look for monthly interest payout FDs if you need regular cash flow (senior citizens use this a lot)
- Check DICGC insurance — only up to ₹5 lakh per bank per depositor is insured
- Avoid premature withdrawal — penalty is usually 0.5–1% lower rate
- Submit Form 15G/15H to avoid TDS if your income is below taxable limit
FD vs Other Safe Options
| Option | Return | Lock-in | Tax benefit | Safety |
|---|---|---|---|---|
| Bank FD | 6.5–9% | 7d–10yr | 80C (5-yr lock-in) | High (DICGC) |
| PPF | 7.1% (Govt.) | 15 yrs | 80C + EEE | Sovereign |
| SCSS | 8.2% | 5 yrs | 80C | Sovereign |
| POMIS | 7.4% | 5 yrs | No | Sovereign |
| RBI Floating-rate Bonds | 8.05% | 7 yrs | No | Sovereign |