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What is a fixed deposit?
Quick answer
A fixed deposit (FD) is money you lock with a bank for a set period at a guaranteed interest rate. You can't touch it until it matures, and in return the bank pays you more interest than a regular savings account — a safe, predictable way to grow savings.
Key things to understand
- Money locked with a bank for a fixed term.
- Pays a guaranteed, fixed interest rate.
- Higher interest than a savings account.
- Early withdrawal usually costs a small penalty.
People also ask
Is a fixed deposit safe?
Yes — FDs are among the safest options; in India bank deposits are insured up to ₹5 lakh per bank by the DICGC.
Can I withdraw an FD early?
Usually yes, but you'll typically earn a slightly lower rate and may pay a small penalty.
How is FD interest taxed?
FD interest is added to your income and taxed at your slab; banks deduct TDS once it crosses a yearly threshold.
Part of the guide: Money Basics: Save, Borrow & Invest →