FD Interest Rates For 1 Year

A Fixed Deposit (FD) is a type of savings scheme that is offered by banks and non-banking financial institutions (NBFCs). It allows individuals to invest a lump sum amount for a predetermined period at a guaranteed interest rate. The interest rate determines the amount of income earned on your investment since higher FD rates translate to greater returns on your investment.

FD rates for 1-year tenure are generally lower compared to longer tenures. However, they offer a good balance between liquidity and returns, especially for short-term financial goals. FD rates for 1-year tenures typically range from 3.5% to 8.5% in India. Securing the best available rate for your 1-year FD helps maximize your returns and achieve your financial goals more efficiently.

Banks Offering Best FD Rates For 1 Year

Finding the right bank for your 1-Year Fixed Deposit (FD) can make a significant difference in maximizing your returns. Several banks stand out for offering competitive FD rates for a 1-year tenure. These banks prioritize customer satisfaction, security, and attractive interest rates to help you grow your savings effectively.

Let's take a look at the options provided by these top banks, you can make an informed decision and take advantage of the best FD rates for a 1-year deposit.

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FD Rates for 1 Year by Public Sector Banks

The table below presents the interest rates applicable to Fixed Deposits (FDs) for 1 year (for a principal amount less than ₹2 crore). Rates are presented for both senior citizens and the general public.

FD Rates for 1 Year by Private Sector Banks

The table below presents the private banks’ interest rates applicable to Fixed Deposits (FDs) for 1 year (for a principal amount less than ₹2 crore). Rates are presented for both senior citizens and the general public.

FD Rates for 1 Year by Small Finance Banks

The table below presents the small finance banks’ interest rates applicable to Fixed Deposits (FDs) for 1 year (for a principal amount less than ₹2 crore). Rates are presented for both senior citizens and the general public.

Check the best FD Rates for different tenures from the table below:

FD Calculator

FD calculators are offered by many banks and financial institutions in India to help you estimate the maturity amount you'll receive on your Fixed Deposit (FD). They simplify the often complex calculations involving interest rates and compounding over time.

The calculator will usually ask you to enter details like:

• Deposit Amount: The principal amount you plan to invest in the FD.
• Interest Rate: You can either enter the rate offered by a specific bank or choose a sample rate.
• Tenure: The period for which you want to invest (in years, months, days).
• Frequency of Interest Payout: This could be monthly, quarterly, half-yearly, or on maturity.

You can check the interest earned on different deposit amounts from different banks. Check the links in the table below:

Features of 1-Year Fixed Deposit (FDs)

1-Year Fixed Deposits (FDs) are a popular investment option offered by banks and financial institutions. With a 1-Year FD, you can lock in your funds for a year and earn a predetermined interest rate on your investment.

Here are the key features associated with 1-year Fixed Deposits (FDs).

Here are the key features associated with 1-year Fixed Deposits (FDs).

• Tenure: The fixed period for which your deposit is locked in is 1 year. You cannot access the principal amount during this period without potentially incurring penalties.
• Interest Rate: You'll earn a predetermined interest rate on your deposit for the entire 1 year. This rate is fixed at the time of opening the FD and is not affected by market fluctuations.
• Returns: You'll receive your principal amount along with the accrued interest at the end of the 1-year term.
• Interest Payment Options: Many institutions allow you to choose how you receive the interest earned on your 1-year FD. Options may include:
• Monthly: Interest is credited to your account every month.
• Quarterly: Interest is credited every three months.
• Yearly: Interest is credited along with the principal amount at maturity.
• Reinvestment: The interest earned is added to the principal amount, allowing for compound interest to grow your returns.
• Early Withdrawal: Withdrawing your deposit before maturity is generally possible, but may incur penalties. These penalties typically involve a deduction from the interest earned or a lower interest rate applied to the withdrawn amount.
• Minimum and Maximum Deposit Amounts: There may be minimum and maximum deposit amounts required to open a 1-year FD.
• Tax Implications: The interest earned on your 1-year FD is taxable as per your income tax slab.

Factors Influencing FD Interest Rates

Fixed deposit (FD) interest rates can vary significantly between banks. Being aware of the factors behind these frequent fluctuations in interest rates can help investors make well-informed decisions that will help them maximize their returns.

Let's take a look at the top factors that can influence the FD interest rates.

• Monetary Policy and Repo Rate: The Reserve Bank of India (RBI) influences FD rates through its monetary policy decisions, particularly the repo rate. When the repo rate rises, banks tend to raise FD rates to attract more deposits and meet their lending needs. A fall in the repo rate often leads to lower FD interest rates.
• Liquidity Needs of Banks:If a bank is facing a shortage of funds, it might offer higher FD rates to attract more deposits. On the other hand, if a bank has ample liquidity, it might lower FD rates.
• Maturity Period of the FD: FDs with longer tenures (5 years or more) offer higher interest rates compared to shorter-term FDs.
• Competition in the Market:Banks compete with each other to attract deposits due to competition in the market. Banks might offer higher FD rates to entice customers, especially for specific tenures or deposit amounts.
• Credit Rating of the Bank:FDs with higher credit rating banks may offer slightly lower interest rates compared to those with lower credit ratings.

Tips to Choose The Right FD For 1 Year

With a wide range of FD schemes available in the market, selecting the right one that matches your financial goals needs careful consideration. Investors must assess multiple factors to identify the most suitable option aligned with their financial goals and risk appetites.

Here are some factors to consider when choosing a 1-year fixed deposit (FD).

FD Interest Rate

• Compare rates offered by different banks and non-banking financial companies (NBFCs). NBFCs may offer slightly higher rates, but check their credit rating to ensure they are reputable.
• Longer tenures typically offer higher rates, but since you're set on 1 year, focus on finding the best rate for that timeframe.

Credibility of the Institution

• Stick to FDs from banks with a good reputation and a high credit rating (ideally "A" or above). This minimizes risk.

Your Needs

• Liquidity: Do you need easy access to the money in case of emergencies? Some FDs penalize early withdrawal, so check the terms carefully.
• Interest Payout: Decide if you want interest payouts regularly (monthly, quarterly) or compounded (interest earned on interest). Compounding generally leads to a higher overall return at the end of the term.

Tax Implications of 1 Year FDs

Fixed deposits (FDs) offer a secure and predictable way to invest your money for a fixed term. While the returns on 1-year FDs may be attractive, it's crucial to consider the tax implications before making an investment.

Here's how taxes impact 1-year FDs in India.

Tax on Interest Income

• The interest you earn on your FD is considered income from other sources and is fully taxable.
• It gets added to your total annual income to determine your tax slab and tax liability.

Tax Deducted at Source (TDS)

• Banks are required to deduct TDS (Tax Deducted at Source) on FD interest exceeding specific limits:
• ₹40,000 per year for individuals below 60 years old.
• ₹50,000 per year for senior citizens (aged 60 and above).
• The TDS rate is currently 10% if you provide your PAN details to the bank.
• If you don't provide PAN, TDS is deducted at a higher rate of 20%.

Reducing TDS Burden (Optional)

• If your total income is below the tax exemption limit (currently ₹2.5 lakh per year), you can submit Form 15G (below 60 years old) or Form 15H (senior citizens) to the bank. This declares your tax-exempt status and avoids TDS deduction.

Steps to Open 1 Year FD Account

Opening a 1-year fixed deposit (FD) account is a simple process that can be done by visiting the bank branch or by online website. Banks have streamlined the account opening procedures, making it convenient for anyone seeking to invest in FDs.

Here are the essential steps involved in setting up a 1-year FD account.

• Step 1: Compare interest rates offered by different banks and NBFCs.
• Decide if you want to open the FD online or by visiting a branch.
• Step 2: You'll typically need your ID proof (Aadhaar card, PAN card, etc.), address proof (utility bill, passport etc.), and bank account information.
• Step 3: Fill out a form requesting a new FD account. Provide your basic information, desired deposit amount, and tenure (1 year).
• Step 4: Deposit the money you wish to invest in the FD. This can be done through cash deposit, cheque, or online transfer depending on the bank's policy.
• Step 5: Once the bank processes your application and receives your funds, you'll receive confirmation of your new FD account.
• Step 6: You'll get an account statement mentioning the deposit amount, interest rate, and maturity date.

Steps to Close FD Account on Maturity

The maturity of a 1-year fixed deposit (FD) account marks the successful completion of an investment cycle. Banks have established clear protocols for closing a matured FD account.

Here's how to close a 1-year fixed deposit (FD) account on maturity.

• Choose Your Closure Method: Decide whether you'll visit your bank branch or use online banking.
• Gather Information: Have your FD certificate and any bank account information handy for reference.
• Initiate Closure: At the Bank Branch: Visit your bank and inform them about closing the FD. Fill out any required forms and submit your FD certificate.
• Online Banking: Log in to your bank's online portal, navigate to the FD section, and choose the closure option for your 1-year FD.
• Confirmation and Processing: The bank will confirm the closure details and process your request.
• Receive Funds: The maturity amount (principal + interest) will be credited to your designated bank account. Depending on the bank, this may be immediate or take a few business days.