Interest rates

fd interest rate: up to 7.5% interest on term deposits: these 5 banks offer the highest interest rates over 3 years FD


Banks have raised their fixed deposit (FD) interest rates following consecutive hikes in repo rates by the Reserve Bank of India (RBI) since May 2022. RBI has raised the repo rate by a total of 190 basis points (bps) since May

Fixed deposits are among the most popular investment options for many investors, especially conservative investors. “The increase in FD interest rates is a welcome step for retirees and senior citizens who are significantly dependent on this passive income,” said Ankit Jain, Partner, Ved Jain & Associates.

Several lenders are now offering over 7% interest rates on DFs. As retail price inflation in the country hit a five-month high of 7.4% in September 2022, a return above 7% on fixed deposits could be an attractive investment option for many Indians.

If you’re considering investing in a fixed deposit, here are the top five banks that offer the best interest rates on a three-year fixed deposit.

Bank name 3 years (%) Quarterly Compound Return (%)
AU Small Financial Bank 7.50 12497.16
DCB Bank 7.50 12497.16
Bandhan Bank 7.00 12314.39
city ​​union bank 7.00 12314.39
Karur Vysia Bank 7.00 12314.39

Source: Compiled by ETIG; interest rate as of November 10, 2022

DCB Bank offers a whopping 7.5% interest rate for three-year term deposits. The AU Small Finance bank is also offering an interest rate of 7.5% on FDs maturing in three years. Bandhan Bank, City Union Bank and Karur Vysya Bank offer an interest rate of 7% on three-year term deposits. Interest rates are those of November 10, 2022.

Read also : Bajaj Finance offers an interest rate of 7.5% on this FD mandate: check the latest FD rates

Best time to invest in term deposits
“As can be expected fixed deposit rates will continue to rise in the near term,” said Gaurav Aggarwal – Senior Director, Paisabazaar.

FD interest rates will rise further

As banks have not yet passed on the full rate hikes to fixed deposit investors, the interest rate on FDs is likely to rise further in the coming months, experts say. “FD interest rates can be expected to rise as long as the RBI’s Monetary Policy Committee (MPC) continues to raise repo rates. Factors such as aggressive monetary policy announcements made by major central banks and our domestic inflation rate still exceeding MPC-prescribed inflation should lead the MPC to opt for further repo rate hikes, which should in turn lead banks to steadily raise their FD rates said Aggarwal.

Read also : Central Bank of India Raises FD Interest Rates and Revises Savings Account Interest Rate

Tips for getting the most out of a high fixed interest rate regime on deposits
If investors want to make the most of the FD’s high interest scheme, they should avoid the auto-renewal option on term deposits. Banks usually offer an auto-renewal option to customers who invest in term deposits. If a customer exercises the auto-renewal option, the bank will automatically renew the fixed deposit for the same term with the prevailing interest rate at the time of maturity. The current interest rate may be higher or lower than the previous fixed deposit interest rate.

“Investors should not opt ​​for the auto-renewal feature when reserving or renewing their term deposits. This could allow consumers to renew their term deposits at higher interest rates, after taking into account account the highest interest rate tranches available at the time of renewal,” Aggarwal said.