6 Percent CD: What It Really Means for Your Savings in India

When you hear 6 percent CD, a Certificate of Deposit offering a 6% annual return, it sounds like free money. But in India, CDs aren’t common—what people really mean is a fixed deposit, a bank product where you lock in money for a set time to earn interest. A 6% return on a fixed deposit today is actually above average. Most banks offer between 5% and 5.75% for 1-year FDs. So if you’re seeing a 6% offer, it’s likely from a smaller bank, a cooperative bank, or a special promotion for senior citizens.

Why does this matter? Because interest rates, the percentage banks pay you to hold your money are the backbone of safe investing in India. If you’re not chasing high-risk crypto or day trading, your money needs to grow without vanishing. A 6% return beats inflation (which hovers around 5% in India), and it’s way safer than putting cash under a mattress. But here’s the catch: that 6% is only guaranteed if you leave the money untouched. If you withdraw early, you’ll lose a chunk of interest. Compare that to a PPF account, a government-backed savings scheme with tax-free returns and a 15-year lock-in, which currently offers 7.1%. Or a liquid fund, a type of mutual fund that gives near-cash access with returns around 6.5%, where you can pull money out in a day. So a 6% CD isn’t the best option—it’s just one option.

People in India often fixate on the percentage alone. But what you really need to know is who’s offering it, how long you’re locked in, and whether the interest is taxable. A 6% FD from a private bank might be safe, but if it’s from a small cooperative bank with low ratings, you’re risking your principal. And remember, FD interest is added to your income and taxed at your slab rate. That 6% might drop to 4.8% after tax if you’re in the 20% bracket. Meanwhile, PPF returns are completely tax-free. So a 6% CD isn’t a win unless you’re comparing it to a 4% savings account. If you’ve got money sitting idle, ask yourself: is this the best place for it? The posts below break down real options—what works, what doesn’t, and what most Indians miss when they chase high rates without checking the fine print.