Best Fd Interest Rates: FD interest rate up to 7.25%: 5 banks offering best 1-year fixed deposit interest rate

With a fixed deposit, you can safely save money by placing a specific sum of money in an account for a predetermined period of time at a predetermined interest rate. You will get both the capital you put down as well as any interest that has accumulated on the deposit once it matures.

Interest rates have risen by 2.25% since then as a result of periodic repo rate increases. Banks interest rate depends on various parameters such as the Reserve Bank of India repo rates, amount, age, tenure, etc,. So, here are top banks that offer best interest rates on 1 year fixed deposits.

(Source: Compiled by ETIG; interest rates as on February 2, 2023)

Liquidity
Fixed deposit offers liquidity, which means it can be withdrawn any time when in need. However, the returns from a fixed deposit could be less in such cases due to the penalty in the event of an early withdrawal.

When to break your old FD
It would be prudent to break the FDs, even with the penalty, and reinvest using the current higher interest rate if you have numerous FDs that have been locked in at a very low rate for an extended length of time. You must use caution and avoid breaking all of your FDs at once in this situation. If you only have a single large, older FD, split it up using the methods already mentioned.

Only when there is still a significant amount of time for the deposit and the FD is not close to maturing should you think about breaking it, though. If you break and reinvest an FD at a higher rate now, you can calculate the net gain using the lower interest rate and penalty for early withdrawal.Penalty clause for pre-mature cancellation
Most of the banks charge penalty for pre mature closure of fixed deposit. According to the Punjab National Bank website, “1% penal interest shall be charged at the time of premature cancellation/part withdrawal of domestic term deposits for all tenors and interest rate payable would be contractual rate minus 1% or the rate under the scheme on the contractual date applicable for the tenor for which the deposit has actually run minus 1%, whichever is lower.”

Withdrawal upon maturity
You have two options when your fixed deposit matures: you can either take the entire money out or open a new one. Upon maturity, you can liquidate or withdraw your deposit online or in person at the branch.