FD Interest Rate: These 7 banks offer the highest rates on 3-year fixed deposits. Check the list here

After keeping the benchmark interest rate unchanged for ten consecutive meetings, the Reserve Bank of India (RBI) is expected to cut the repo rate at the next monetary policy committee (MPC) meeting scheduled for December. Hence, it is recommended to lock your savings in fixed deposits (FDs) for as long as possible, argue experts.

“If your financial goal is 2-3 years, you can lock the required amount in a fixed deposit. No more waiting,” says Preeti Zende, Sebi-registered investment advisor and founder of Apna Dhan Financial Services.

This is because once the rate cut cycle begins, banks will follow suit by lowering lending rates and term deposit interest rates. Here, we list the top seven banks that offer high interest rates on their three-year fixed deposits (FDs).

It should be noted that one-year FDs do not offer the highest returns and a five-year tenure is too long for someone with aligned financial goals in the near future.

Hence, one can explore the possibility of locking money in three-year fixed deposits (FDs) in a bank of one’s choice.

Private lenders

As can be seen from the table below, private lender HDFC Bank offers 7% interest to general citizens and 7.5% to senior citizens on its three-year fixed deposits. These rates came into effect on July 24 this year. ICICI Bank also offers the same rates i.e. 7 percent and 7.5 percent for senior citizens and senior citizens.

(Source: Bank websites)

Another private lender, Kotak Mahindra Bank, offers 7 per cent to general citizens and 7.6 per cent to senior citizens on its 3-year FDs. These rates went into effect on June 15. The Federal Bank is also offering 7 percent and 7.5 percent to senior citizens and senior citizens, respectively, on its 3-year fixed deposits.

State lenders

When it comes to the state lenders, the interest rates are a bit lower. State Bank of India (SBI) offers 6.75 percent to general citizens and 7.25 percent to senior citizens on 3-year FDs. These rates went into effect on June 15.

Punjab National Bank offers 7% to general citizens and 7.5% to senior citizens on 3-year fixed deposits. These rates went into effect on October 1. Union Bank of India offers 6.7 per cent to general citizens and 7.2 per cent to senior citizens on three-year fixed deposits. These are the latest rates that went into effect on August 2nd.

Meanwhile, it is also important to mention that only a small to moderate portion of the overall portfolio should be allocated to fixed deposits as FD returns are in single digits and are also taxable.

“Just because current FD rates are lucrative, one should not be tempted to lock away a large chunk of one’s money in FDs only. These deposits are taxable and in the long run do not generate inflation hedged returns,” he adds Mrs. Zende.

Note: This story is for informational purposes only. Please consult a SEBI registered investment advisor before taking any investment related decision.