Steps on How to Earn More Money from Fixed Deposit

Posted in Investment Tips By Sajhyadri Chattopadhyay -
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Fixed deposits (FDs) are instruments through which you earn interest by depositing a lump-sum amount with a financial institution for a selected tenor. The rate of interest you get on an FD is generally higher than what you earn on a savings deposit. Additionally, stable returns make this savings tool much safer than investing in market-linked options. Read on to learn about how to earn more from a fixed deposit and make the most of your savings. 

Fixed Deposits are considered a safe investment option, but they typically offer lower returns compared to riskier investments. However, you can consider these strategies to potentially maximise your returns – 

High-Interest FDs: 

Shop around for banks or financial institutions offering higher interest rates on FDs. Different banks offer varying interest rates, so compare rates across different options. 

Tenure Selection: 

The interest rate often increases with the tenure of the FD. Consider a longer tenure if you can afford to lock in your funds for an extended period.  

Sometimes, FD issuers have special tenors that come with a higher interest rate. Signing up for these can also help you augment your earnings. To determine your returns and compare them based on different FD interest rates, you can use an FD calculator. Based on the results, you can choose a lender that offers the best returns.  

Interest Payout Frequency: 

Opt for a frequency that suits your needs. Choose between cumulative and non-cumulative FDs based on your financial goals. 

Cumulative FDs: Interest is compounded quarterly or annually and reinvested into the FD, leading to higher returns upon maturity. 

Non-Cumulative FDs: Interest is paid out at regular intervals (monthly, quarterly, or annually), providing a steady income stream. 

While monthly payouts may provide regular income, choosing a cumulative option with an annual payout may offer higher overall returns. 

Use Ladder Strategy: 

Instead of putting all your money into a single FD, use a laddering strategy. This involves dividing your investment into multiple FDs with different maturity dates. This way, you can benefit from periodic liquidity and potentially higher interest rates for longer tenures.


Invest Rs. 100,000 in three FDs: one with a 1-year tenure, another with a 2-year tenure, and the third with a 3-year tenure. As each FD matures, reinvest the funds in a new FD with the longest tenure.  

Renewal with a Rate Hike: 

When an FD matures, you have the option to either withdraw the funds or renew the FD. Renewal involves reinvesting the principal amount for another tenure. If there has been an increase in interest rates since the initial investment, renewing the FD allows you to lock in the new, higher rates. This strategy can be advantageous in a rising interest rate scenario, as it helps you benefit from higher returns on your reinvested funds.  

Starting an FD in your Parents’ Names: 

Many banks offer special interest rates for senior citizens. If your parents are senior citizens, consider opening FDs in their names to take advantage of higher interest rates. This strategy can be particularly beneficial if your parents are not utilizing their tax-free income limits. The interest earned on their FDs could be tax-free up to a certain limit, depending on their overall income. Many banks offer higher interest rates for senior citizens. If applicable, consider investing in FDs designed specifically for senior citizens to earn more interest.  

Choosing a Tax-Saving FD: 

Some banks provide Tax-Saving Fixed Deposits, also known as 5-year tax-saving FDs, which offer tax benefits under Section 80C of the Income Tax Act in India.

The principal amount invested in these FDs is eligible for a deduction of up to ₹1.5 Lakhs from your taxable income. The interest earned, however, is taxable. Ensure you understand the lock-in period of 5 years associated with these FDs before making a decision.  

Applying for your FD Online: 

Many banks provide the option to apply for FDs online, making the process convenient and time-efficient. To apply for an FD online, you typically need to have an account with the bank's online banking platform. Log in to your account, navigate to the FD section, and follow the instructions to open an FD.

Online FD applications often allow you to choose the type of FD, tenure, and interest payout frequency. Make sure to provide accurate details and follow the required verification process.  

NRE or NRO Fixed Deposits: 

If you are an NRI (Non-Resident Indian), you can explore NRE (Non-Residential External) or NRO (Non-Residential Ordinary) FDs. 

NRE FDs are repatriable, meaning the principal and interest earned can be freely repatriated to your foreign account.

NRO FDs are non-repatriable, and the interest earned is subject to taxation in India.  

Investing in Corporate FDs: 

Apart from traditional bank FDs, consider exploring corporate FDs, which are offered by non-banking financial institutions and companies. Corporate FDs may offer higher interest rates, but they also carry higher risk. It's important to thoroughly research the company's financial health before investing. 


These features provide investors with options to customize their fixed deposit investments based on their financial goals, income requirements, and market conditions. Whether you are a senior citizen looking for higher returns, someone needing regular income, or an investor capitalizing on interest rate changes, understanding these aspects allows you to make informed decisions about your fixed deposit. Ready to open an FD online? Choose Bajaj Markets and get up to 8.75% returns today! 

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