Your Fixed Deposit (FD), Recurring Deposit (RD) Investments To Fetch Higher Returns

The government has hiked interest rates on fixed deposits (FD) and recurring deposits - along with the interest rates on other small saving schemes - for the quarter ending December 2018. FD interest rates have been hiked across maturities of one year, two years, three years, and five years. RD interest rates have been increased across a maturity of five years.  Since April 2016, interest rates on all small saving schemes have been recalibrated on a quarterly basis. The interest rates of small saving schemes are linked to government bond yields. Earlier, they used to be revised annually.

What fixed deposit, recurring deposit interest rate hike means for you

The latest move from the government means that your investments in fixed deposits will now fetch an interest rate which is higher by 0.3 to 0.4 per cent. Your investments in recurring deposits will fetch an interest rate which is higher by 0.4 per cent.

A one-year fixed deposit will now fetch an interest rate of 6.9 per cent as compared to the earlier interest rate of 6.6 per cent; a two-year fixed deposit will offer an interest rate of 7 per cent as compared to the earlier 6.7 per cent; a three-year fixed deposit will get you an interest rate of 7.2 per cent as compared to the previous rate of 6.9 per cent; and a five-year fixed deposit will now fetch a return of 7.8 per cent, 0.4 per cent higher than the earlier 7.4 per cent, the government said.

On five-year recurring deposits, you will get an interest rate of 7.3 per cent as compared to the earlier rate of 6.9 per cent.

Interest rates on fixed deposits and recurring deposits are compounded quarterly.