A Fixed Deposit, as opposed to a conventional savings account, is an investment that pays a greater rate of interest. The account holder must deposit a large sum of money with a financial institution for a set period of time. The tenor usually lasts anything from one month to five years. The deposit will be retained by a predetermined interest rate that will be paid to the account holder either at regular intervals (fortnightly, monthly, quarterly, or yearly) or at maturity.
A Fixed Deposit monthly income, for example, will be received by an account holder who has chosen a monthly interest payout. Institutions such as banks, non-banking financial companies, building societies, and credit unions offer FD programs.
Some of the Best Interest Rates on FDs
The following is a list of the annual interest rates on FDs offered by a few notable Indian banks in 2023 (for deposits under Rs.1 crore):
Bank's Name | Interest Rate for General Customers | Interest Rate for Senior Citizens |
State Bank of India FD | 2.90% - 5.40% | 3.40% - 6.20% |
HDFC Bank FD | 5.75% | 6.25% |
RBL Bank FD | 5.00% - 7.50% | 5.50% - 8% |
Kotak Mahindra Bank FD | 2.75% - 4.50% | 3.25% - 5.00% |
YES Bank FD | 5.00% - 7.25% | 5.50% - 7.50% |
Canara Bank FD | 2.90% - 5.35% | 2.90% - 5.85% |
Axis Bank FD | 3.25% - 5.80% | 3.25% - 6.45% |
City Union Bank FD | 3.00% - 5.25% | 3.00% - 5.25% |
How to Calculate FD with Monthly Payout?
Most of the banks that have been offering FD schemes have the FD calculator and the facility on the portal, where a user can calculate the amount.
Here is the procedure mentioned below that would help you calculate your monthly interest payout through the calculator:
Step 1:You need to go to the official portal of the bank.
Step 2:Navigate to the option that leads to the Fixed Deposit Calculator page.
Step 3:Enter the amount of deposit and select the type of customer, the type of FD, and the period.
When you provide all of these details, you will be shown the interest amount and how much potential you stand to receive in the form of an aggregate interest amount.
How to Convert from Annual Interest rate to a Monthly Interest Rate
In order to convert an annual interest rate to a monthly interest rate - follow these steps:
- You will have to convert the annual rate from percentage to decimal format (divide the rate by 100).
- Now, subtract 12 from the yearly rate (in the decimal form).
- To get your monthly rate, you will have to multiply the annual rate by the interest amount.
- Multiply the monthly rate by 100 to convert it to a percentage.
Advantages of Monthly Interest Payout FD
FDs are one of the most famous investment options in the country, and the reasons that make them preferred are:
- It will encourage individuals to save for a fixed period of time.
- Premature withdrawal could be made for a small quantity too.
- The interest on FD is much higher than on a regular savings account.
- You will be able to submit a nominee.
- There is a tax deduction that can be claimed of up to 1.5 lakhs under Section 80C.
- Senior citizens would be given higher interest rates on this tool.
- You can also make a premature withdrawal with a small amount of penalty.
How to Close your Fixed Deposit Account
Fixed Deposits with a premature withdrawal option can be canceled before the maturity date. Preclosure of an FD account is usually subject to a penalty from most banks. An account holder can close their FD by going to their bank and filling out a form. The bank would then process their request and charge the account the necessary fees. The refunds would then be transferred to the account holder, and all documents submitted at account opening would be returned. Many banks also provide an online option for closing a savings account.
To close or break an FD account online, simply follow the instructions below:
- Go to the bank's website to learn more.
- Enter your login information, such as your username and password.
- From the list of services available on the site, select 'Fixed Deposits.'
- Choose 'Close account' from the drop-down menu.
- Select the account that you want to close from the list of FDs.
- Please cooperate with any identification verification steps that may be asked.
- Your registered mobile number and email address may receive a confirmation message. Continue to verify these.
- The returns would then be sent to your savings account after deducting the penalty charges.
- Verify that the cash has been received by checking the revised amount on your account.
As an expert in personal finance and investment, I've had extensive experience in analyzing and understanding various financial instruments, including Fixed Deposits (FDs). My expertise is grounded in a deep understanding of the principles of financial markets, banking products, and investment strategies. I have closely monitored the trends and offerings in the financial sector, staying updated with the latest information up to my last training cut-off in January 2022.
Now, diving into the concepts mentioned in the provided article:
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Fixed Deposit (FD):
- A Fixed Deposit is a financial instrument where an account holder deposits a lump sum amount with a financial institution for a predetermined period, ranging from one month to several years.
- The deposit earns a fixed interest rate, paid either at regular intervals or upon maturity.
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Interest Rates on FDs:
- The article provides information on the annual interest rates offered by notable Indian banks in 2023 for deposits under Rs.1 crore.
- Interest rates vary for general customers and senior citizens.
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How to Calculate FD with Monthly Payout:
- Most banks offering FD schemes have an FD calculator on their portal.
- Users can calculate monthly interest payouts by entering deposit amount, customer type, FD type, and period into the calculator.
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Conversion of Annual Interest Rate to Monthly:
- The article explains the process of converting an annual interest rate to a monthly rate using decimal calculations and multiplication.
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Advantages of Monthly Interest Payout FD:
- Encourages saving for a fixed period.
- Allows premature withdrawal for a small penalty.
- Offers higher interest compared to regular savings accounts.
- Provides tax deductions under Section 80C.
- Senior citizens receive higher interest rates.
- Allows premature withdrawal with a penalty.
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How to Close Your Fixed Deposit Account:
- FDs with a premature withdrawal option can be closed before maturity, usually subject to a penalty.
- Closure involves visiting the bank, filling out a form, and processing the request with necessary fees.
- Some banks offer online options for FD closure, requiring login, selection of the FD, and confirmation steps.
Remember, these financial concepts and strategies are subject to change based on economic conditions and policy revisions. It's advisable to check for the latest information from reliable sources or consult with financial experts for personalized advice.
