What is Fixed Deposit (FD)?

A Fixed Deposit (FD) is a savings product offered by banks and NBFCs where you invest a lump sum for a fixed period at a fixed rate of interest. At maturity, you get back the principal plus the interest earned. FDs are one of the most popular low-risk investment options in India.

How Does a Fixed Deposit Work?

When you open an FD, you deposit a one-time amount (principal) for a chosen tenure—ranging from 7 days to 10 years in most banks. Interest can be paid at maturity (cumulative FD) or monthly/quarterly (payout FDs). In a cumulative FD, interest is compounded typically quarterly and paid at maturity.

Benefits of Fixed Deposits

• Safety: FDs up to ₹5 lakh per depositor per bank are insured by DICGC.
• Predictable returns: You know the exact maturity amount at the time of investment.
• Flexible tenures: From a few days to 10 years.

How FD Interest is Calculated

Most banks in India use quarterly compounding. You can use our FD calculator, FD maturity calculator, and compound interest calculator.

Tax on FD Interest

FD interest is taxable under "Income from Other Sources". TDS may apply if interest exceeds ₹40,000 (₹50,000 for seniors). Use our FD tax calculator. See tax on FD interest.