Fixed Deposit: What It Is, How It Works, and Why It Matters in India

When you put money into a fixed deposit, a savings instrument where you lock in a sum of money for a set period in exchange for guaranteed interest. Also known as term deposit, it’s one of the most trusted ways for everyday Indians to grow their savings without taking risks. Unlike a regular savings account, where interest rates can drop overnight, a fixed deposit locks in your rate from day one. You know exactly how much you’ll earn—no surprises, no market swings.

Most banks and post offices in India offer fixed deposits, and they’re especially popular with retirees, first-time savers, and anyone who wants to avoid the stress of stock markets. The interest is usually paid monthly, quarterly, or at maturity. You can pick a term from 7 days to 10 years. Longer terms? Higher rates. That’s the rule. Some banks even give extra interest for senior citizens—often 0.5% more. It’s not magic, just a simple reward for patience.

Fixed deposits relate closely to other safe options like recurring deposits, where you deposit a fixed amount every month instead of one lump sum, and liquid funds, a type of mutual fund that’s almost as safe as an FD but offers slightly better returns. But unlike liquid funds, FDs don’t fluctuate in value. Your principal is safe. That’s why so many people in India treat FDs like a financial anchor.

Here’s the thing: while FDs are safe, they’re not always the best choice for beating inflation. If you’re putting money away for 5 years and the FD rate is 6%, but inflation is 5%, you’re only gaining 1% in real terms. Still, for people who can’t afford to lose a rupee—like parents saving for a child’s education or someone planning a medical emergency fund—FDs are the go-to.

What you’ll find below are real, practical posts that cut through the noise. You’ll see how FD rates compare across banks, what happens if you break your FD early, why some companies offer better rates than banks, and how to use FDs as part of a bigger money plan. No fluff. No jargon. Just what works for real people in India.