Investing in a ₹5 lakh fixed deposit (FD) is a great way to secure regular monthly interest. It offers a steady income while keeping your principal safe. With competitive interest rates, FD investments provide a risk-free option to grow wealth.

The FD interest is calculated monthly, quarterly or annually. To save time, you can also use an FD calculator to calculate the maturity amount easily. For instance, if you invest ₹5,00,000 at 6.5% p.a. for 5 years, the estimated monthly returns will be ₹2,708 and the total value will be ₹6,62,500.

Monthly Interest Payout for ₹5 Lakh Fixed Deposit

The following table illustrates the ₹5 lakh fixed deposit interest per month in 2026 over a 5-year tenure:

Monthly Interest for ₹5 Lakh Fixed Deposits Offered by Major Banks & NBFCs 2025

The table below provides current interest rates and monthly interest income from ₹5 lakh FD across popular banks and NBFCs (updated for 2026):

Note: The rates may vary and may change at the discretion of a bank or financial institution. 

TDS on a ₹5 Lakh Fixed Deposit 

Here is a table outlining the Tax Deducted at Source (TDS) on FD of ₹5 lakh:

Penalty for Withdrawing a ₹5 Lakh Fixed Deposit Before Maturity 

If you withdraw your ₹5 lakh FD before maturity, you may have to incur a penalty and yield lower returns. For instance, if you invested the amount at 7.5% p.a. but withdraw after 1 year, the applicable interest rate will be 6.5%. However, after incurring a 1% penalty, the final interest rate becomes 5.5% p.a.

Important Things to Consider Before Investing ₹5 Lakh in a Fixed Deposit

Here are a few things that you must consider before you invest in a ₹5 lakh fixed deposit:

Interest Rates: Choose non-cumulative FDs for regular income or cumulative FDs for long-term growth. Interest rates may change based on market conditions.

Premature Withdrawal Penalty: Always check penalties before investing to avoid surprises during emergencies.

Nomination: Always add a nominee to ensure smooth transfer of funds in case of unforeseen events.

Cumulative vs Non-Cumulative FD for ₹5 Lakh Investment

For a ₹5 lakh fixed deposit, choosing between cumulative and non-cumulative FD depends on whether you want wealth growth or regular income.

Cumulative FD (Best for Growth)

• Interest is compounded quarterly and paid at maturity 
• Higher overall returns due to compounding 
• Ideal for long-term goals like retirement or wealth creation 

Non-Cumulative FD (Best for Income)

• Interest is paid monthly, quarterly, or annually 
• Suitable for regular income needs 
• Commonly preferred by retirees 

Example (₹5 lakh at 7.5% for 5 years):

• Cumulative FD maturity: ~₹7.25 lakh 
• Non-cumulative monthly payout: ~₹3,125 

Conclusion

A fixed deposit of ₹5 lakh can provide a reliable monthly income with competitive interest rates in 2026. Using an FD calculator helps you estimate returns accurately and choose the right tenure.

With the right choice between cumulative and non-cumulative FDs, you can align your investment with your financial goals while ensuring stability and consistent returns.

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