Prior to investing in a fixed deposit, investors often compare interest offered by different banks. One might argue that most banks — more or less – offer similar, if not same, interest on their term deposits.
However, one must understand that a difference of 50 basis points over a long period of time can increase the interest income considerably. Let us understand this with the help of an example. If your total fixed deposit amounts to ₹10 lakh, an additional 50 basis point extra income leads to an additional income of ₹5,000 in one year.
If the FD is for three years, the additional income spikes to ₹15,000. And if the amount of FD is increased to double, this extra income – on account of extra 50 basis points – spikes to ₹30,000.
Here, we list out the highest interest rates offered by different banks across time periods. Some banks offer highest interest on their 2-3 year deposits, while the other bank offers highest interest on a 15-18 month deposit.
As we can see in the table above, highest interest rates are offered by Federal Bank which gives 7.5 percent to regular citizens and 8 percent to senior citizens on 444 day-tenure.
HDFC Bank offers 7.4 percent interest to regular citizens and 7.9 percent to senior citizens on an FD of 4 years and 7 months.
ICIC Bank offers the highest interest of 7.85 percent to senior citizens on a tenure of 15-18 months.
Likewise, Kotak Mahindra Bank offers 7.4 percent to regular citizens and 7.9 percent to senior citizens on an FD of 390-391 days tenure.
State lenders
The interest offered by state lenders is slightly lower. State Bank of India (SBI) offers 7 percent to regular citizens and 7.5 percent to senior citizens on 2-3 year tenure FD.
Bank of Baroda offers 7.15 percent and Union Bank offers 7.3 percent to regular cittizens on an FD of 2-3 yrars and 456 days, respectively. Senior citizens are entitled to receive an extra 50 basis points.
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