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FDs are hassle-free and easier to manage as compared to other investment options.

Fixed deposits (FD) are still considered by many as a dependable and secure option to park one’s hard-earned money. All leading banks have been pruning interest rates for the past few years at a stretch. But still there are some banks that offer relatively high interest rates. These days rates between 5.5% and 6.5% are considered to be good given the overall climate of interest rates. Money9 gives you best nine FD rates of short-term investment tenure, i.e. less than or equal to two years.

Two-year FD rates

If we go through the interest rates of two-year FDs, we can see that no public sector bank features in the top-nine list. The rates range between 6% and 5.25% and all are offered by private sector banks.

Private lender IndusInd Bank offers the best rate 6%. YES Bank and RBL Bank are also offering the same rate of 6% for tenure of 2 years.

Another private lender DCB bank offers a slightly low rate of 5.95%. Three lenders, Bandhan Bank, IDFC Bank and Karnataka Bank offer 5.5% for two-year tenure.

Karur Vysya Bank and Dhanalaxmi Bank both offer 5.25% interest rate for the same tenure.

The only public sector bank that offers more than 5% interest to the common people is Union Bank of India. It offers 5.1% for two years.

Senior citizens are eligible to get an extra interest of 40-50 basis points over this rate by all the banks.

Advantages of FD

FDs are hassle-free and easier to manage as compared to other investment options. FDs offer fixed and guaranteed returns upon maturity. It is quite assuring for senior citizens who do not want to take risk with their investment.

There are different interest payout modes that you can choose from before you start investing.

 The interest can be obtained yearly, half-yearly, quarterly, monthly basis, or at the end of the fixed deposit term together with the principal. You can choose the frequency of payment depending upon your need.

FD returns are taxable as per the respective income slabs. Banks will deduct TDS if the interest income exceeds the limit of Rs 10,000 in a financial year. However, five-year FDs which are tax-free are also popular with a lot of citizens.

Unclaimed FD

According to RBI data, about Rs 18,381 crore is lying idle in different bank accounts till March 31, 2019. According to rules investors’ money goes to investor education fund if the money lies idle or unclaimed for more than 10 years after an account turns into a dormant or inoperative.

Approximately Rs 5,000 crore is idling in matured fixed deposits which are unclaimed till date, according to RBI data.