Fixed Deposits — still worth it in a high-rate world?
Fixed Deposits remain the bedrock of conservative Indian savings. They guarantee a return, are insured up to ₹5 lakh per bank, and require zero market timing. But the headline rate isn't the full story.
Compounding frequency matters: a 7% rate compounded quarterly yields ~7.19% effective, while monthly compounding pushes it closer to 7.23%. Over long tenures, this gap is real money.
Tax is the silent killer. Interest is taxed at your slab rate — for a 30% bracket investor, a 7.5% FD nets just 5.25% post-tax. Use the post-tax stat to compare with debt mutual funds and tax-free bonds.
Senior citizens get 0.25–0.75% extra at most banks; small finance banks often offer 1% bonuses. Always check the effective yield, not just the headline rate.
Premature withdrawal usually costs 0.5–1% off the contracted rate. The calculator's premature stat shows the exact damage so you can decide between breaking the FD or taking a loan against it.