Fixed Deposit Minimum Periods across Various Fixed Deposit Schemes

Are you aware that the fixed deposit minimum period can be 7 days? However, based on the type of fixed deposit you invest in and the financial institution, the FD minimum period can vary.

If you are looking for the type of fixed deposit to invest in for a minimum period for your short-term goal, go through this blog. Explore the fixed deposit types, their minimum period and the interest rates to make an informed decision. 

Key Highlights

• The minimum FD period varies based on the FD type and the bank.
• Minimum tenure for FD can be 7 days to 5 years (tax-saving FD).
• FDs with shorter tenures typically offer lower interest rates than those with longer durations.

What is the Minimum Tenure of FD and Its Types?

1. Regular/ Standard Fixed Deposit

It is the most common type of fixed deposit account offered by different Indian banks and NBFCs for non-senior citizens. You can invest your money in these accounts for a predetermined period and earn fixed interest income monthly/quarterly/biannually/annually. All Indian citizens, including minors, can opt for a standard fixed deposit account. 

• Standard Fixed Deposit Minimum Period: 7 days 
• Interest Offered: 4% to 7.40% per annum

2. Senior Citizen Fixed Deposit

Senior citizen fixed deposit accounts usually give an extra 0.50% interest over traditional FD interest rates. These schemes are reserved for individuals above 60 years of age. One can expect to earn interest income from these accounts monthly/ quarterly/half-yearly/yearly. 

• Senior Citizen Fixed Deposit Minimum Period: 7 days
• Interest Offered: 4.40% to 7.60% per annum

3. Cumulative Fixed Deposit

The interest accrued on cumulative FDs is compounded at regular, predetermined intervals to grow your money. For instance, your FD interest can be cumulative on a monthly or quarterly basis. If your interest rate is 8.40%, the actual annualised return can go up to 8.67% per annum with cumulative fixed deposits.

• Cumulative Fixed Deposit Minimum Period: 6 months
• Interest Offered: 4% to 7.40% per annum

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4. Non-Cumulative Fixed Deposit

Non-cumulative FDs also generate returns based on the compounding effect, unlike the cumulative FD schemes, which provide regular payouts. While they offer lower returns compared to cumulative FDs for the same tenure, they offer better liquidity to depositors. 

• Non-Cumulative Fixed Deposit Minimum Period: 6 months
• Interest Offered: Lower than cumulative FDs for the same tenure

5. Corporate Fixed Deposit

Corporate fixed deposit schemes are a notable addition for individuals seeking to diversify their investment portfolios. However, only a few NBFCs and corporate brands provide a corporate fixed deposit account. They come only with cumulative interest-paying options where you get assured returns at the end of maturity. 

• Fixed Deposit Minimum Period: 12 months
• Interest Offered: 6.85% to 7.30% per annum

6. Tax-Saving Fixed Deposit

If you deposit your funds in a tax-saver FD, you can avail tax deductions of up to ₹1.5 lakh in a financial year under Section 80C of the Income Tax Act, 1961. This FD comes with a lock-in period of 5 years for all investors. 

• Tax-Saver Fixed Deposit Minimum Period: 5 Years 
• Interest Offered: Can be the same as regular FD or variable

Taxation Rules for Fixed Deposits in India

FD interest is treated as ‘Income from Other Sources’ and taxed as per your income tax slab. In addition, banks, NBFCs, and corporates apply Tax Deducted at Source (TDS) on FD interest once it crosses certain thresholds. The rules vary depending on the type of depositor and FD:

• For regular depositors, no TDS is deducted if the annual FD interest is up to ₹50,000. Once this limit is exceeded, TDS is applied at 10% with PAN and 20% without PAN.
• For senior citizens, the TDS exemption limit is higher at ₹1,00,000 per year. Beyond this, the same rule applies: 10% with PAN and 20% without PAN.
• For tax-saving fixed deposits, investors can claim deductions of up to ₹1.5 lakh per financial year under Section 80C of the Income Tax Act.

Final Words

Fixed deposit minimum period can range between 7 days and 5 years based on the type of FD you choose. Choosing a longer fixed deposit tenure can help you earn a high rate of interest. Further, choosing fixed deposits with interest cumulative quarterly or monthly can maximise your FD returns.

To book fixed deposits at a high interest rate, you can check out the Stable Money-partnered banks offering up to 8.40% interest per annum. Stable Money offers DICGC coverage on FDs up to ₹5 lakh. 

Download the Stable Money app now to book your FD with zero waiting time!