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A short-term fixed deposit (FD) is a type of investment that has a relatively brief maturity period, typically ranging from a couple of days to a year. However, this may vary across issuers. The interest rate offered on such FDs differs across issuers.
Other than the tenor, there are no differentiating factors between a short-term FD and a regular fixed deposit.
The following table highlights the short-term FD interest rates that some issuers offer for tenors between 7 days and 12 months.
Financial institution |
Regular Citizens (p.a.) |
Senior Citizens (p.a.) |
Bank of Baroda |
4.25% – 7.10% |
4.75% – 7.60% |
HDFC Bank |
3.00% – 6.60% |
3.50% – 6.50% |
Kotak Mahindra Bank |
2.75% – 6.50% |
3.25% – 7.00% |
SBI |
3.50% – 6.00% |
4.00% – 6.50% |
Bank of India |
3.00% – 5.75% |
4.50% – 6.50% |
Canara Bank |
4.00% – 6.85% |
4.00% – 7.35% |
ICICI Bank |
3.00% – 6.00% |
3.50% – 6.50% |
Axis Bank |
3.00% – 6.00% |
3.50% – 6.50% |
3.75% – 6.50% |
4.25% - 7.00% |
|
3.25% - 6.35% |
3.75% - 6.85% |
|
3.75% – 6.50% |
4.25% - 7.00% |
Note: The above-mentioned table is not an exhaustive list of all the banks, and the interest rates mentioned are subject to change at the issuer’s discretion.
Listed below are some of the key advantages of short-term FDs:
Capital Preservation
It is a low-risk investment, providing a stable and secure way to preserve capital.
Achieve Short-term Goals
An ideal option if you have upcoming expenses like a vacation or wish to make a down payment on a major purchase.
Interest Payout Options
Receive interest payouts periodically at an interval of your choice or at the end of the maturity period, depending on the FD tenor.
Security
Temporarily deposit funds before investing in high-yield investments with the assurance of the Deposit Insurance and Credit Guarantee Corporation covering up to ₹5 Lakhs per bank issued FD.
Overdraft Facility
You can opt for a loan against FD of up to 95% of the maturity amount with minimal paperwork.
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The information provided by BFDL is related to the rates provided by Banks and Deposit taking NBFCs as available from public domain and under no circumstances is intended to be source of advice or recommendation of any financial investment advice or endorsement of any sort. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers and use of such information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. Display of any intellectual property along with the related product information does not imply BFDL’s partnership with the owner of the intellectual property of such products and is solely for the purpose of information, unless otherwise provided by BFDL.
Frequently Asked Questions
Are short-term FDs taxable?
Yes. The interest that you earn from a short-term deposit is taxable at the income tax slab rate applicable to you.
What is the minimum tenor for a short-term FD?
The minimum tenor for a short-term FD starts from 7 days.
Can NRIs open a Short-Term FD?
Generally, short-term fixed deposits are only offered to Indian residents. However, a few banks and NBFCs also allow Non-resident Indians (NRIs) to book these FDs.
Are short-term FDs a good investment option?
Yes. You can earn guaranteed returns as per the short-term FD rates, and your investment amount remains secure.
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