FD interest rate up to 8.1%: Top banks offering highest interest rates on 1-3 year fixed deposit tenures

Fixed deposits guarantee capital preservation, in contrast to volatile market-linked investments. This feature makes it attractive for senior citizens and individuals who are risk averse. Upon the maturity of the FD, you will be paid a set interest rate on your investment

An FD allows you to invest a set amount of money at a set interest rate for a predetermined amount of time. The terms of each financial institution might affect a fixed deposit's interest rate. Fixed deposits with terms ranging from one week to ten years are available for selection

Also read: FD interest rates of 8-9% to continue for a longer period as RBI holds repo rate; how to invest in fixed deposits


Also read: FD rates up to 9.5%: These 8 banks offer over 9% interest rate on fixed deposits for senior citizens

Here are top banks' fixed deposit interest rates for tenures ranging from 1 – 3 years.

Bank Name	Highest interest rate (%)	Highest interest rate tenure	1-3 years
Axis Bank	7.20	17 months to less than 18 months	6.70% to 7.20%
Bandhan Bank	7.85	500 days	7.45% -7.85%
DCB Bank	8.00	25 months to 26 months	7.15% to 8%
Federal Bank	7.50	500 days	6.80%- 7.50%
HDFC Bank	7.25	18 months to less than 21 months	6.60%-7.25%
ICICI Bank	7.20	15 months to 2 years
IDFC First Bank	8.00	500 days	6.50%- 8%
IndusInd Bank	7.65	1 year to 2 years	7% to 7.65%
Kotak Mahindra Bank	7.40	390 days to less than 23 months	6.50% to 7.40%
RBL Bank	8.10	18 months to 2 years	7.50% to 8.10%
Bank of India	7.25	2 years	6.8% to 7.25%
Canara Bank	7.25	444 days	6.85% to 7.25%
Indian Bank	7.25	400 days - IND SUPER	6.10% to 7.25%
Punjab National Bank	7.25	400 days	6.75% to 7.25%
Punjab & Sind Bank	7.40	444 days	6.20% to 7.25%
State Bank of India	7.10	400 days - Amrit Kalash	6.80% to 7%
Union Bank of India	7.25	399 days	6.75% to 7.25%

Source: Bank websites; interest rates as on April, 4, 2024.

Maximising returns: FD Laddering

Using the FD laddering strategy, you split your total investment amount among many FDs with different maturities. Rather than investing all of your funds in a single FD, you can create a ladder of FDs with different maturities.

According to the ICICI Bank, “A Fixed Deposit Laddering Strategy is an investment technique that involves dividing a lump sum of money into multiple FDs, each with varying maturities. Instead of investing the entire amount in a single deposit, investors allocate it across several deposits with staggered maturity periods. The primary objective of this approach is to strike a balance between earning steady returns and maintaining access to funds at regular intervals.”

How are fixed deposits taxed?

The interest income you earn from an FD is fully taxable. The interest earnings form a part of your total tax liability. Due to the fact that interest received on FD is regarded as "income from other sources," Tax Deducted at Source, or TDS, is applied. The TDS is deducted at the exact moment your bank credits your account with interest revenue.
This is the rate of tax deducted at source (TDS) on fixed deposit interest that exceeds Rs. 40,000 in a fiscal year. For elderly individuals (60 years or over), the TDS threshold is Rs. 50,000.

Tax Deducted at Source (TDS) is a system implemented by the Income Tax Department to collect taxes during certain transactions.