Fixed Deposit (FD) Explained: Best Interest Rates & Investment Guide for 2025

Fixed Deposits (FDs) are a popular investment tool, especially favoured by those seeking a stable and predictable return on their savings. They offer a secure haven for your money, shielding it from market volatility while generating consistent interest income. Let us explore the ins and outs of FDs to understand why they remain a cornerstone of many investment portfolios.

What is a Fixed Deposit?

A Fixed Deposit is a financial instrument offered by banks and non-banking financial companies (NBFCs) where you deposit a lump sum of money for a predetermined period. The institution pays you a fixed interest rate over the chosen tenure. Unlike a savings account where you can withdraw funds freely, FDs come with a lock-in period. Premature withdrawals usually incur penalties, impacting the earned interest. Think of it as lending your money to the institution for a specific time, and they pay you rent (interest) for it.

Why Choose Fixed Deposits?

FD is one of the most popular investment instruments among people in the middle class. Fixed deposits (FDs) are a popular investment choice for several good reasons. Check a few of them listed below:

• Peace of Mind (Safety): Imagine your money tucked away safely, growing steadily without the ups and downs of the stock market. That's the beauty of an FD. Your principal amount is protected, and you know exactly what to expect. This makes them a great option for those who prioritize security.
• Predictable Growth (Stable Returns): With an FD, the interest rate is fixed when you open the account. This means you can accurately predict how much your investment will grow over time. This predictability makes financial planning much easier, whether you're saving for a down payment, a child's education, or retirement.
• Tailored to Your Needs (Flexibility): FDs aren't one-size-fits-all. You can choose a term that aligns with your financial goals. Need the money in a few months? Short-term FD. Saving for something years down the line? Long-term FD. The flexibility allows you to customize your investment strategy.
• Earning More (Higher Interest Rates): Compared to a regular savings account, FDs typically offer better interest rates. This means your money works harder for you, growing faster than it would in a low-interest savings account.
• Extra Benefits for Seniors: Many banks and financial institutions, including Bajaj Finserv, offer higher interest rates to senior citizens. This makes FDs a particularly attractive option for retirees looking for a stable income stream.

Features of Fixed Deposits

Do you know that FDs come with a set of distinct features that make them attractive? Below discussed are a few of them for your knowledge:
Fixed Interest Rate: One of the most appealing aspects is the guaranteed interest rate. You know exactly how much you'll earn over the deposit's tenure, allowing for better financial planning.

1. Fixed Tenure: You choose the duration of your deposit, ranging from a few weeks to several years. This allows you to align your investment with your financial goals.
2. Lower Risk: Compared to market-linked investments like stocks or mutual funds, FDs are considered relatively low risk. Your principal amount is generally safe, and the returns are predictable.
3. Liquidity (with penalties): FDs (Fixed Deposits) have a lock-in period, but you can withdraw your money early, though there may be penalties. This provides some degree of liquidity in case of emergencies.
4. Loan against FD: Many institutions offer the facility to take a loan against your FD. This can be a convenient option if you need funds without breaking your deposit.

Who Can Invest in Fixed Deposits?

Many reasons make it one of the preferred investment options for all. Almost anyone can invest in FDs, including:

• Individuals: Salaried or self-employed individuals can invest in FDs.
• Senior Citizens: Many banks offer higher interest rates to Senior Citizens, making Senior Citizen Fixed Deposits (FDs) an attractive option for retirement planning.
• Businesses: Businesses can park their surplus funds in FDs for short or medium terms.
• Hindu Undivided Families (HUFs): HUFs are also eligible to invest in FDs.
• Trusts and Institutions: Various trusts and institutions can invest in FDs as well.

Eligibility Criteria for Opening a Fixed Deposit (FD) Account:

To open an FD account, investors must meet the following eligibility requirements:

Required Documents for Opening an FD Account:

Investors need to provide the following documents when applying for an FD:

Top Fixed Deposit Rates in India 2025

Here’s a comparison of FD rates as of February 2025, based on revised bank updates and NBFC trends:

Fixed Deposit Interest Rates – Banks (February 2025)

Fixed Deposit Interest Rates – NBFCs & Small Finance Banks (February 2025)

Note: Rates sourced from bank websites and financial portals as of Feb 2025. Check with institutions for real-time updates.

Example of Fixed Deposit Returns Offered by Bajaj Finserv in 2025

Let us understand the return on investment in an FD by a customer with Bajaj Finserv for a better understanding of calculations and benefits to a customer.

Raj, a 35-year-old IT professional from Mumbai, wanted to invest ₹5 lakh safely without market risks. While traditional banks offered lower interest rates, Bajaj Finserv stood out with an attractive 8.05% interest rate for a 2-year FD.

Comparing Fixed Deposit Options:

The Results: Higher Returns, Hassle-Free Investment

After 24 months, Raj’s FD matured, and here’s how his investment grew:

With the extra ₹83,444 he earned in interest, Raj:

• Planned a family vacation
• Reinvested the remaining amount for future savings 

Raj was happy with his safe and profitable investment and even recommended Bajaj Finserv FDs to his colleagues.

Why Choose Bajaj Finserv Fixed Deposits?

Bajaj Finserv offers high-return, secure, and flexible fixed deposit options, making it a smart investment choice.

Key Benefits of Bajaj Finserv Fixed Deposits:

What Makes Bajaj Finserv FDs Stand Out?

• Higher Returns than traditional banks
• Customizable Plans for different financial goals
• Safe & Reliable investment with top-rated credibility
• Hassle-Free Process with online account management

Bajaj Finserv FDs combine security, flexibility, and higher returns, making them an excellent choice for growing your savings.

About Investing in an FD through InvestKraft:

InvestKraft is a trusted aggregator known to offer great features on its varied products. The detailed explanation below simplifies the various benefits and steps involved in fixed deposit investment, especially through our platform InvestKraft:

• Open a Fixed Deposit with Ease: InvestKraft makes it easy to open a fixed deposit account with a company from the comfort of your home or office. There's no need to visit their branch; you can complete the entire process online in just a few steps.
• Enjoy Attractive Interest Rates: Companies at InvestKraft offer competitive interest rates on FDs for different tenures, ranging from 7 days to 10 years. You can check the available rates and choose the best option that suits your investment goals.
• Small and Regular Payments: You can start investing in FDs with as little as ₹10,000. This makes it a great option for both first-time investors and those looking to make small but regular investments to build their savings over time.
• Safe Deposit: Security is a top priority when investing through InvestKraft. You can be confident that your money is safe, and the platform follows strict measures to ensure the protection of your investments.

3 Easy Steps to Invest in Fixed Deposit through InvestKraft

Here are the following steps:

1. Enter FD Details: To start, you'll need to choose the deposit amount, the tenure for how long you want to invest, and how you want the interest to be paid out—either at regular intervals or all at once when the FD matures.
2. Set Up Investment Account: Next, create your investment account with InvestKraft by providing your personal and professional details. This ensures that your account is ready for investing and managing your FD.
3. Make Payment: Finally, make the payment using your preferred method, such as net banking, UPI, or EasyPay. Once the payment is done, your FD will be booked and your investment will start earning interest.

Final Thought

Fixed deposits are a timeless investment option that offers safety, stability, and attractive returns. Whether you’re planning for a short-term goal or securing your retirement, FDs can be tailored to meet your financial needs. With institutions like Bajaj Finserv offering high interest rates and flexible tenures, investing in FDs has never been more rewarding.
Before investing in fixed deposits, compare interest rates, check the credibility of the institution, and align your FD tenure with your financial goals. For any kind of information and guidance, you can contact our representative using our contact details.  

Frequently Asked Questions (FAQs) About Fixed Deposits

1. What is a Fixed Deposit (FD)?

A Fixed Deposit (FD) is a secure investment where you deposit a lump sum for a fixed tenure and earn interest at a predetermined rate.

2. How does an FD work?

You invest a fixed amount for a chosen period (e.g., 1 to 10 years). The bank pays interest, which can be received monthly, quarterly, annually, or at maturity.

3. What are the benefits of investing in an FD?

• Guaranteed Returns – Fixed interest rates ensure predictable earnings.
• Low Risk – FDs are one of the safest investment options.
• Disciplined Savings – Helps you save without easy withdrawals.

4. What are the different types of FDs?

• Regular FDs – Standard interest rates and tenure.
• Tax-Saving FDs – Eligible for tax deductions under Section 80C.
• Senior Citizen FDs – Higher interest rates for senior citizens.
• NRE/NRO FDs – For Non-Resident Indians to invest in India.

5. What is the minimum and maximum tenure for an FD?

FD tenure typically ranges from 7 days to 10 years, depending on the bank.

6. Can I withdraw my FD before maturity?

To learn how to avoid these penalties, check out our blog on How to Escape from Early Withdrawal Penalties of Fixed Deposits?

7. How is FD interest taxed?

Interest earned is taxable as per your income tax slab. TDS (Tax Deducted at Source) is applicable if interest exceeds ₹40,000 (₹50,000 for senior citizens).

8. How can I open an FD account?

You can open an FD online via bank websites/apps or offline by visiting a branch with KYC documents.

9. Can I get a loan against my FD?

Yes, you can avail a loan of up to 75-90% of your FD amount, usually at a slightly higher interest rate than the FD.

10. Where can I find the best FD interest rates?

Compare FD rates across banks and NBFCs. Bajaj Finserv offers 7.00% to 8.05% for regular investors and 7.35% to 8.60% for senior citizens.

For easy investment, check options on InvestKraft.

Author: Rajesh Mishra

Rajesh Mishra is a professional and multilingual writer with over 12+ years of versatile experience in content writing.

He has crafted compelling narratives across a diverse array of industries, including BFSI, fintech, IT, pharmaceuticals, e-commerce, education, fashion, and more. He is a commerce graduate from Mumbai University. His strong academic foundation and passion for storytelling enable him to engage audiences and deliver impactful content.

 

He is adept at transforming complex concepts into clear, relatable language, making his work accessible to both, industry professionals and everyday readers. He thrives in dynamic environments, leveraging his extensive knowledge to create articles, blogs, whitepapers, and marketing materials that resonate with target audiences. Driven by a commitment to excellence and a keen eye for detail, Rajesh Mishra continuously explores emerging trends and technologies, ensuring his content remains relevant and thought-provoking.